Patent generator

The recent recession forced Canadian high-tech companies to prove they could survive. Some, like Nortel Networks Corp., failed. However, Ottawa-based technology-licensing company Wi-LAN Inc. emerged unscathed.

“Our business is largely recession proof,” says Tyler Burns, director of investor relations and communications at Wi-LAN.

“People are always going to need laptops. They’re always going to need phones.”

Wi-LAN president and CEO Jim Skippen agrees.

“If you focus on Wi-LAN’s cash revenues, we’ve had at least 30 per cent growth every year since 2006. So if you look just at our top line, you wouldn’t think Wi-LAN faced any recession at all, because we’ve just seen very significant growth.”

Founded in 1992, Wi-LAN established itself as a high-speed wireless data and Internet communications provider, focusing on inventing and producing low-cost, high-speed wireless technology.

However, the company fell into what Skippen describes as “rough shape” in 2006, entering the year with a net loss of $25.8 million.

“Change was needed at Wi-LAN in order for it to compete in the marketplace,” says Skippen.


Later that year Wi-LAN altered its business model to generate most of its revenue through developing and licensing intellectual property rather than through product manufacturing.

This change was a shrewd move for Wi-LAN, explains Jason Donville, president and CEO of Donville Kent Asset Management Inc.

“Wi-LAN has risen from the ashes of a company that was in pretty bad shape, so part of the reason why they’ve been able to do so well is that they’re coming from this adversity.”

The fact that we now have 106 companies sets a precedent that the industry sees our technology’s value.

Donville also explained that Wi-LAN timed the change fortuitously.

“There’s a certain part of the market that’s opened up over the last ten years for these intellectual rights companies, and obviously there’s been a good investor appetite, especially for where they’ve been able to get their finances.”

Although Wi-LAN left manufacturing, it remains involved in many areas of the high-tech sector.

The company has a portfolio of more than 970 patented inventions in wireless network devices, including technologies found in cellular phones, laptops, and televisions.

Skippen says this diversity has benefited his company.

“I think we have a pretty valuable technology portfolio, and I think many companies understand that if they want to operate with freedom in some big wireless or TV markets, they need a license to our patents in order to operate.”

In early September, Wi-LAN signed its one-hundredth licensee of its technologies, which Skippen believes is a testament to what his company has to offer.

“The fact that we now have 106 companies sets a precedent that the industry sees our technology’s value.”


This growth has also been lucrative for Wi-LAN.

For nine months ending Sept. 30, Wi-LAN earned $39.5 million – a significant increase from the $28.8 million earned in the same period last year. Skippen says he expects the total revenue for the year to be “in the range of $46 to $48 million.”

Along with the financial results, Wi-LAN announced signing 27 additional licenses to date this year, three consecutive quarters of greater than 20 per cent revenue growth year over year, and the acquisition of 75 issued and pending patents.

Burns defines this as a “very exciting time for Wi-LAN.”

Wi-LAN’s recent growth has had a positive impact on its share price. The company’s shares hit $5.15 in early November, a 39-month high for the Ottawa firm, and a far cry from the 60 cents a share its stock was worth in March 2006.

“It’s an acknowledgment by people in the financial community that the company is establishing value,” says Burns. “It shows that with the activities that we have underway, especially in terms of our litigations, that they believe that there is value in the business and they’re willing to pay for it.”

I hope all we’ll have left is the rising revenues, with a lot less expense

Donville agrees, saying it is no wonder investors have been drawn to Wi-LAN.

“Things seem to be going in their favour,” says Donville. “There seems to be a lot of growth metrics that are in place, so now it’s just a matter of executing their business plan and adding to their patent portfolio.”

“The outlook looks quite positive.”

However, it’s not all good news. Wi-LAN’s third quarter produced a loss of $6.2 million, largely due to increased litigation fees.

Those higher-than-expected fees accounted for more than 41 per cent of the company’s operating expenses in the quarter. Most are tied to patent infringement against many of the largest notebook makers, including Dell and Apple. Those trials are set to conclude in the early months of 2011.

Skippen says that although Wi-LAN’s litigation expenses are currently higher than he anticipated, he does not expect that to continue.

“I hope and believe it’s temporary,” says Skippen. “It’s really like an investment, and when it goes away, I hope all we’ll have left is the rising revenues, with a lot less expense.”


Looking into the future, Skippen says he wants his company to maintain the same pace it has had since he joined in 2006.

“I’ll be happy if the future of Wi-LAN looks like the last four years at Wi-LAN,” says Skippen. “In other words, we just continue to increase revenues at a significant rate, and continue to build up our strength, both on the R&D front and on technology licensing.”

“We just have to continue to perform.”

The advantage of that is you can get much better (network) quality and you can handle more devices.

Skippen is also looking toward two projects Wi-LAN is currently developing: enabling technology in white space, and picocells.

“White space is the spectrum that’s been freed up because TV signals don’t need to be broadcasted in an analog way. They can be broadcast digitally, so they take up a lot less room. It’s a very good spectrum to broadcast wireless signals.”

Burns says the benefit of developing technology that can tap into this unused white space spectrum is that the network range increases significantly.

The second of Wi-LAN’s product developments are picocell technologies – base stations for cellular phones and other mobile devices that cover small areas roughly the size of a city block.

“The advantage of that is you can get much better (network) quality and you can handle more devices,” says Skippen.

Burns agrees these developments represent the future of Wi-LAN.

“We are developing some innovative technologies that we think are going to be important, which could generate hundreds of patents in the future, that we would then look to license to other companies,” says Burns.

“It should bear fruit in the future.”