The future — likely the very survival — of Calgary-based Wi-LAN Inc. now depends on a court battle with a much-bigger U.S. opponent that has much deeper pockets.
Wi-LAN is seeking more than $780 million in a lawsuit alleging patent infringement that puts the local high-speed wireless company on a legal collision course with networking giant Cisco Systems Inc.
Wi-LAN’s “bread-and-butter” is its ability to market its patent for its bandwidth-boosting technology called W-OFDM says Anthony Anirud, senior telecom and technology analyst at IDC Canada Inc.
Patent protection would enable Wi-LAN to licence its technology to companies manufacturing equipment using the company’s wireless standard. Without Wi-LAN securing that protection and being able to collect royalties and other licencing fees, “one would be hard-pressed to see how this company would be able to move forward,” Anirud says.
Wi-LAN isn’t talking about the lawsuit it has launched against Radiata Communications Inc., based in San Jose, Calif.
“Under legal advice, our lawyers have advised us that we not comment on this issue at all,” says Wi-LAN spokeswoman Nancy Toombs.
Business Edge left several voice-mail messages at both Radiata and Cisco Systems, but couldn’t reach representatives of either company.
In a statement of claim filed Nov. 16 in the Federal Court of Canada, Wi-LAN alleges that Radiata Communications Inc. knowingly violated Wi-LAN’s Canadian patent on its OFDM technology, which is also known as its IEEE 802.11a standard.
The IEEE is the Institute of Electrical and Electronic Engineers, an international standards-setting body. Significantly, the IEEE has yet to approve a single global OFDM technology standard from a number of competing technologies.
Wi-LAN is hoping that the global standard will be based on its W-OFDM technology. But that outcome is far from certain.
Three days before Wi-LAN filed its lawsuit, Cisco, also of San Jose, announced it would buy privately held Radiata for US$295 million in stock. Inexplicably, the news release about that purchase — and which analysts believe triggered the lawsuit — was not accessible on Radiata’s Web site on Monday.
In its lawsuit, Wi-LAN claims $780 million Cdn in damages involving profit it says Radiata may have made from the alleged patent infringement, a further $10 million in punitive damages, an unspecified amount for “reasonable compensation” of losses suffered by Wi-LAN, and legal costs.
Wi-LAN also wants the courts to order Radiata to stop making, offering for sale, or selling equipment that infringes on Wi-LAN’s Canadian patent and to deliver up or destroy any existing devices.
Radiata and Cisco don’t hide the fact that they are using the disputed IEEE 802.11a standard.
Cisco, in a news release earlier in November, said it is buying Radiata to strengthen its “ability to deliver next generation wireless networks using the IEEE 802.11a standard for faster data rates.”
In a news release in September —and still accessible Monday on Radiata’s Web site — Radiata claimed to have developed “the industry’s first IEEE 802.11a-based wireless engine” based entirely on its own technology.
Radiata calls its technology COFDM or coded orthogonal frequency division multiplexing. Wi-LAN calls its technology W-OFDM or wideband orthogonal frequency division multiplexing. The similarities are striking, analyst Anirud says.
Although Wi-LAN refused to comment on the lawsuit, company chairman and chief executive Hatim Zaghloul told Business Edge earlier this month that “Cisco did not have any patents on OFDM.Anybody doing high-speed OFDM would be infringing on our patent.”
At the time, Zaghloul said that he preferred to avoid a court battle with Cisco, which he speculated had a “$100-billion marketing machine.” He was hopeful that the IEEE would be in a position to approve a single, global OFDM standard by July 2001.
But Cisco’s purchase of Radiata and both companies’ promotion of the disputed IEEE 802.11a standard evidently forced Wi-LAN’s hand, says analyst Anirud.
He points out that Cisco and Wi-LAN held discussions last year about the possibility of Cisco buying Wi-LAN, but those talks ended abruptly.
Wi-LAN also can’t afford a protracted court battle with Cisco, Anirud says. “If you’re looking for a situation where who can outspend whom, it’s pretty obvious in this instance who will win or lose.”