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Wi-LAN Acquires Patent Portfolio

Last week, Canadian wireless equipment manufacturer Wi-LAN announced an agreement to acquire 17 U.S. patents and patent applications as well as their foreign counterparts. The acquisition will further strengthen the company's progress towards a planned April 2005 commercial release of its WiMax products.

According to Ken Wetherell, Wi-LAN's Vice President of Corporate Communications, the name of the company from which the patents were acquired is currently being kept confidential, but will be announced within the next two weeks.

Under the terms of the agreement, Wi-LAN will pay the seller approximately U.S. $3.9 million in cash and U.S. $3.6 million in special warrants exercisable into Wi-LAN common shares. The seller will then have the option to license the patents back in the future, and will also receive a percentage of royalties.

"They'll get between 5 and 15 percent, depending on the volume of units that we're selling," Wetherell says.

Wetherell says the newly acquired patents all relate specifically to the media access control layer, or MAC layer, of the 802.16 WiMax standard. "Many of the patents, the diagrams and descriptions in the patents themselves, are pretty much identical to those in the actual standard," he says.

As a result, the patents will not only give Wi-LAN a stronger technical background in developing the MAC layer for the WiMax standard, but will also give the company extra leverage in licensing the technology to others. "We already have some patents on the physical layer, the OFDM patents, and now these give us some intellectual property with regard to the MAC layer," Wetherell says.

Of course, there is a strategic aspect to the acquisition as well: Wi-LAN's owning and enforcing of these patents will keep any competitors from doing the same.

"This allows us to prevent someone else from picking up these patents and perhaps slowing down our development by doing so," Wetherell says.

Wi-LAN is already heavily involved in the development of the WiMax standard, and Wetherell says the patents will help significantly in that regard. "We were already developing the MAC layer in conjunction with a group of PhDs that we've hired out of Egypt," he says. "We'll forward this information to them, and that will help them to speed up their development."

While this acquisition will not change Wi-LAN's timeline in developing WiMax products, Wetherell says the patents will help solidify the company's plans. "This will help us to develop the media access control layer quicker," he says. "We're still targeting having the first to market products available in April of 2005, but this gives us more confidence in meeting that date."

Wi-LAN's next step in the development of WiMax products will be the deployment of mobile WiMax systems under the 802.16e standard. "The standard should be in place in the first half of 2005, and we'll definitely have a head start," he says. "Once you get into mobile products, it's a much larger market, with many more interesting applications than fixed wireless."

Wi-Fi Planet Conference Do you have questions about the future of WiMax?
Join us at the Wi-Fi Planet Conference & Expo, June 8-10, 2004 at the Baltimore Convention Center in Baltimore, MD. We have a session called "The Promise of WiMax" that should provide answers.