A Case Study: Spotlight on WiLAN

As we frequently discuss creating, sustaining and growing value through defending and prosecuting intellectual property assets, it’s probably time to put a spotlight on WiLAN.

"WiLAN was founded in 1992 to commercialize technology inventions that made low-cost, high-speed wireless networking a reality.  Used in several generations of proprietary products manufactured by WiLAN and other products offered by industry, these inventions were, by 2005, commercialized in millions of wireless networking devices worth many billions of dollars.  Realizing the value that its intellectual property brought to industry, WiLAN chose in 2006 to focus its business on developing, protecting and monetizing patented inventions."

That decision in 2006 came with the hiring of current CEO, James Skippen, an executive with significant IP strategy experience and a clear vision. Yesterday Mr. Skippen predicted the turnaround strategy to fully protect and monetize the company’s IP will push current fiscal year’s sales to double 2010’s, and he suggested growth rates in excess of 20% for the next five years. The Ottowa Citizen did the math: "With a staff of just 45, Wi-LAN was valued at $779 million Thursday, making it Ottawa’s most valuable public company ahead of life sciences firm Nordion Inc."

WiLAN boasts a portfolio of over 1,100 patented inventions, both internally grown and acquired, that fuel the wireless industry.  Over 240 companies have licensed WiLAN technologies for use in manufacturing or sales of communication and consumer electronics.

The company classifies much of their technology patents as belonging to these groups:

3G Cellular– A range of wireless communication technologies used in modern cellular handsets;

Bluetooth^TM – A wireless technology that sends and receives data over short distances, creating a personal area network (PAN);

DOCSIS – A standards-based technology to provide high-speed internet and other data over coaxial cable networks;

DSL – A standards-based access technology that provides broadband Internet access over twisted pair telecommunications wiring;

Wi-Fi – The underlying technology of wireless local area networks and other products based on IEEE 802.11 specifications;

WiMAX – Broadband wireless technology that provides longer-range wireless connectivity based on IEEE 802.16 specifications;

V-Chip – A technology that allows users of multimedia devices to filter out programming they consider inappropriate for their children to watch, whether that be from a television broadcast, DVD/VCR/DVDR or computers that have the ability to receive and process broadcast signals.

Analysts who wish to dive deeper into specific patents can start here.

So, as you would expect, strategy one is to license technologies to the wireless community, and it is currently successful.  Strategy two is to aggressively pursue compensatory damages from companies that use WiLAN technology but refuse to pay “reasonable” royalties for that use.  “When all reasonable efforts undertaken by WiLAN to reach a negotiated agreement fail, litigation is an unfortunate but sometimes necessary step for WiLAN to be fairly compensated by those who profit from the use of our technology.” The company refers to expenses incurred in pursuing such litigation as “investment” in litigation, and they are quite serious about it.

You can follow their progress in these litigation efforts, and at the same type get a feel of scale, by following links the company provides. The chronology includes references to Daubert arguments and other issues of interest to the valuation community. Most recently, Intel and others settled with Wi-LAN in advance of a trial that had been scheduled to begin Feb. 2 in Texas. The trial has been canceled.  According to the Ottowa Citizen, “Intel, Broadcom and Atheros each signed agreements — four to six years in length — in which they licensed all of Wi-LAN’s patents in exchange for fixed payments.”

WiLAN is also suing dozens of firms over patent infringement related to other technologies, including Bluetooth and 3GPP.  Defendants in the Bluetooth infringement action include Apple, Toshiba, Sony and others. Again, the favored Texas venue has been used, and trial is currently scheduled for April.

WiLAN's is an extraordinary story, and one that should find its way into business schools as their curriculum planners catch on to the value creation properties of intellectual property, not left alone, but managed aggressively.