Patent trolls were behind more than half of the US’s IPR lawsuits last year, the first time they have represented the majority of such actions, and that reflected the increasing aggression of companies in chasing licensing fees as other revenue streams come under pressure. However, it is a risky business for companies which rely entirely on patents, without product business to back that up. The ups and downs of the IPR firms have been epitomized in the saga of Canada-based WiLan, once a broadband wireless equipment maker, which converted to a licensing-only model in 2006.
WiLan has a portfolio of about 3,000 patents in wireless technologies such as Wi-Fi, 2G, LTE as well as other broadband technologies. Its stock crashed to just C$27 in July when a court decided against it, in a key case against Ericsson, Alcatel-Lucent, HTC and Sony. But now it has come to a settlement with two of those opponents, with separate pacts with ALU and HTC. These victories may well affect the outcome of other pending trials and negotiations, including those with Ericsson and Sony ‘ WiLan has filed for a retrial of that 3GPP-related case – and with other firms such as BlackBerry, Apple and Hewlett-Packard.
Several of these are approaching resolution, and a rush of licensing deals could settle investor nerves about the high costs of litigation at WiLan. Next month an important trial, focused on claims against a group of vendors over CDMA-Wi-Fi patents, will take place.
WiLan CEO Jim Skippen said, after the HTC deal was announced: ‘In taking its first licence, HTC will join many other handset makers, including Samsung, LG, and Motorola, who recognized the value of the many wireless inventions in our patent portfolio.’ This pact involved WiLan dropping all five pending lawsuits against the smartphone maker and signing a multiyear licensing deal covering handsets and tablets sold in the US.
A couple of days earlier, WiLan had announced its ALU settlement, which covered a range of patents and led to litigation in US courts in Florida and Texas being dropped. Terms of the deals were not disclosed, though one analyst calculates that the ALU agreement would be worth between $5m and $10m a year over its five-year term.
Eyal Ofir of Clarus Securities told Canadian reporters: ‘In our opinion this is a significant milestone for WiLan when considering this comes only two months after losing the 3GPP case in which Alcatel was a defendant.’ He believes the catalyst for the new settlements relates to the October CDMA/Wi-Fi trial, which includes patents that were successfully licensed to several major firms, such as Intel, Broadcom, Atheros and others, in advance of a trial in 2011. ‘From a strategic standpoint, while the company has already settled with and licensed Dell, signing Alcatel is a more significant settlement in this case and should apply more pressure on the remaining defendants including Apple, HTC and others to come to the table,’ Ofir said.
WiLan’s stock leapt on the news, but is still below C$5, a far cry from its dotcom days in early 2000, when it traded around C$90, before crashing to C$9 later the same year. In late 2012, the firm stepped up its litigation activities, with a Florida suit against Apple, HTC and Sierra Wireless, focused on LTE patents; two Texas actions against Apple and Sierra related to HSPA; and a Florida action against BlackBerry focused on Bluetooth. In 2010, Bluetooth patents were cited in a huge suit against almost a score of the hi-tech sector’s big names, including Apple and Sony.