A Canadian wireless company is attempting to cash in on 10-year-old patents that it says form the basis of Wi-Fi, and has recently purchased other patents that could have an impact on Wi-Fi’s successors.
Calgary-based Wi-LAN Inc.
is suing Cisco Canada for use of OFDM (orthogonal frequency division multiplexing) technology in its Linksys and Aeronet products. OFDM is a modulation technology used in the 802.11a and 802.11g IEEE Wi-Fi standards.
Wi-LAN says it has held OFDM patents since 1994, but has waited this long to pursue any legal action because it did not want to impede the development of wireless technology. Prior to its action against Cisco, Wi-LAN sued Markham, Ont.-based Redline Communications in a similar patent dispute in 2002 and the case was settled out of court earlier this month.
Cisco drew the attention of Wi-LAN back in 2000 when it bought Radiata, a small Canadian wireless chipmaker. Wi-LAN had filed a suit against Radiata, which was inherited by Cisco but dismissed and Cisco subsequently retired the division.
Now that Cisco is using 802.11a/g technology in its wireless products, the path is now clear for legal action, said Wi-LAN spokesman Ken Wetherell. “”We felt it was a good time to go back to Cisco, since they do have the largest market share in 11a (and) 11g.””
Cisco declined comment on the suit, but did release this statement to the press: “”Wi-LAN claims that its patents are related to industry standards and appears to be applying the patents to the Wi-Fi industry as a whole. We will respond as appropriate after reviewing the claims.””
The only way to know if Wi-LAN has a rightful claim against Cisco is by litigating it, said Craig Mathias, analyst with the Farpoint Group, an advisory firm specializing in wireless.
Patent lawsuits have become an accepted business practice amongst technology companies, said Mathias, based in Ashland, Mass., and they are willing to compete in the courtroom almost as readily as they are on the open market.
But “”it is not a slam dunk,”” particularly in the case of a smaller company going after an operation like Cisco, with deep pockets and considerable legal resources.
“”If they want to take on Cisco and Cisco’s legal department, that is a very risky strategy because they could be literally be tied up in court for 10, 12, 15 years and never see a nickel,”” said Mathias. “”This has been tried by lots of companies in lots of different areas over the years. Rarely is it successful.””
James Longwell, a lawyer, patent and trademark agent with the Toronto office of Ogilvy Renault, said that there is often more room for interpretation in information technology patents than in areas like medicine or biotechnology. “”And that’s what makes it difficult to advise clients on whether there is infringement or not,”” he said. “”A big loss will hurt you. There’s no doubt. If you lose, your patent’s dead. It can be very much a winner takes all approach.””
Wetherell said his company is fiscally sound and ready to take the next step: “”We’re strengthened our balance sheet. We raised $23 million last fall and so now we’re in a position where we can get out there and defend our IP again.””
He also said the Wi-LAN doesn’t expect to see much of a windfall from any sort of licensing arrangement with Cisco, should the lawsuit come out in W-LAN’s favour. Wi-LAN has already reached a licensing agreement with Phillips Semiconductor for its 802.11 a/g chipsets and also has an agreement in place with Fujitsu Microelectronics America, co-developing chips for the 802.16 standard.
Also known as WiMAX, 802.16 is a technology that purportedly allows for a 30-mile radius of wireless Internet coverage at speeds that exceed DSL. The standard also uses OFDM technology.
Wi-LAN has purchased patents from Ensemble Communications Inc., a wireless company based in San Diego, Calif., and filed a letter of assurance with the IEEE last week. In a statement, Wi-LAN said it is “”prepared to grant a licence for the patents and patent applications to an unrestricted number of applicants.”” It also said that, “”Wi-LAN believes the infringement of these patents is unavoidable in any implementation”” of the 802.16 standard.
Wi-LAN may face a long legal battle with Cisco, but Mathias said that he advises his clients to file many patents and file them often. Suits are often settled between parties by cross-licensing or trading patents. Don’t assume that patents will lock out competition and generate royalties, said Mathias. “”Do assume you’ll have something to trade when you get sued later on. Patents are not an impediment to competition anymore.””
Wi-LAN has said it will seek legal recourse from Cisco through the Canadian court system for reasons of cost and expediency, but Cisco’s American operation has also been named in the suit.