WiLAN eyes Nortel's patent hoard

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WiLAN eyes Nortel's patent hoard

Former broadband wireless manufacturer turned patent hoarder trebles its litigation budget.

By CAROLINE GABRIEL

Published: 8 March, 2010

One year on from its bankruptcy, Nortel has sold virtually all its business units, having offloaded its Carrier VoIP unit to Genband at the turn of the month. Apart from its stake in LG-Nortel, the key remaining asset is a large portfolio of patents, many relating to OFDMA, MIMO and other key attributes of LTE. Large companies like Ericsson have been rumored to be interested, and there has also been speculation that a rump company, still using the Nortel brand, would emerge from bankruptcy purely to market the IPR. Now a third option has emerged, in the shape of fellow Canadian firm WiLAN, former broadband wireless manufacturer turned patent hoarder.

WiLAN's CEO, Jim Skippen, told the Reuters news agency that it had held preliminary talks with bankruptcy trustees, and that investment banks have approached it with a view to bidding for Nortel's LTE patent assets. "We are looking at the patents ... We are quite interested in the LTE or the 4G wireless portfolio," Skippen said. "Although there may be few other portfolios, but that is the one we are most interested in."

However, this would be a far larger deal than those WiLAN is used to, and could require it to float a separate company, backed by the investment banks, to afford to buy the portfolio. The firm followed something of the path some analysts have plotted for Nortel, escaping bankruptcy itself by ditching its equipment operations and focusing entirely on IPR. It showed its original patent hand, mainly related to WiMAX and OFDM Wi-Fi, when it sued Cisco and others back in 2004. This led to Cisco signing a royalties deal the following year, and WiLAN setting up as an IPR shop, expanding its activities into various wireless areas including UMTS. It now has over 800 patents related to wireless and consumer electronics technologies and expects revenues this year in the range of $40m to $45m, up from 2009's figure of $35.4m (for a 14-month period). This growth will be based on expanding the portfolio further, and also defending it aggressively - WiLAN's litigation budget trebled last year to $21.3m, covering lawsuits, patent filing and due diligence on IPR. Current patent lawsuits involve LG and Intel. Licensees include Nokia, RIM, Sony, Panasonic and Cisco.

Nortel's IPR would be a significant boost. Most of it was excluded from the sale of LTE, CDMA and GSM businesses to Ericsson, and for a while came under RIM's radar. About 4,000 patents remain on the table, and based on Nortel's own estimate that the 4G patents could command a 1% royalty on every relevant LTE device sale in the years to come, JPMorgan recently made the calculation that the patents could be worth between $950m and $2.9bn.

Hence WiLAN's interest. "I still think it is going to take a while for this whole thing to play out, but we definitely have oars in the water, and we definitely are looking at it and thinking about," Skippen said on a conference call with analysts, as reported by Reuters.

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