By Sunny Freeman, The Canadian Press
Wi-LANInc. (TSX:WIN) announced the settlement of a patent dispute withanother U.S. technology company Thursday, the third in a wave ofsettlements that started with computer processing giant Intel Corp.
The settlements come in advance of a Feb. 2 court date, when Wi-LANis slated to make its argument that some of the world's largest computercompanies have used its patented technology without its permission.
The relatively small Canadian patent house launched a court challengelast April against several of the world's high-tech heavyweights overalleged patent infringements involving its Bluetooth, Wi-Fi and Wi-Maxtechnologies.
In the latest settlement, the Ottawa-based company said it had signeda deal with computer chip maker Broadcom Corp. that calls for Broadcomto take a multi-year license for Wi-LAN's patent portfolio and to make aseries of payments to Wi-LAN.
Financial terms of the deal, which is expected to close in the nextfew weeks, were not disclosed, but the agreement calls for all lawsuitsbetween the companies in the U.S. to be dropped.
A Wi-LAN spokesman deferred comments to the company's chiefexecutive, Jim Skippen, who was travelling and could not be reached forcomment.
The deal comes just days after the Canadian company reached similarpatent settlements with industry leaders Intel Corp. and AtherosCommunications Inc.
Such challenges are common in the technology industry and often hundreds of millions of dollars can be at stake.
Investors should expect settlements with more of the defendants inthe coming weeks, after the biggest players in the case settled ahead ofjury selection slated to begin Friday, said Dev Bhangui, an analyst atFraser Mackenzie Ltd.
Most of the remaining defendants are computer hardware makers likeApple Inc. (Nasdaq:AAPL), Dell Inc. (Nasdaq:DELL), Hewlett-Packard Co.(NYSE:HPQ), are involved indirectly because they used chips from firmslike Intel, Atheros and Broadcom, he said.
The settlements with Broadcom and Intel pave way for more becausesuch "tech titans" are used to patent lawsuits and as such are the mostlitigious of the defendants.
"They were expected to be the ones who would be the last hold out ...either before the trial or they would even try their luck at thetrial," he said.
"Intel had the biggest army of lawyers and everybody else, the remaining 22 or 21 defendants are looking up to Intel."
Bhangui pegged the amount Wi-LAN is seeking at $500 million andbelieves Intel likely paid around $70 million, and Atheros settled for$80 to 90 million, while Broadcom paid $140 million.
Wi-LAN said it is hopeful that it can reach settlements in theoutstanding cases. The company has said it is prepared to defend itspatents in court but would also consider any settlement offers itconsiders "fair and reasonable."
In a separate case, Wi-LAN launched lawsuits in November againstComcast Corp., Time Warner Cable, Inc. and Charter Communications,claiming those companies are infringing on Wi-LAN's patents by offeringfor sale, operating, advertising and marketing cable systems and cablemodem products.
Wi-LAN shares were halted for the announcement, but later resumed andclosed down 46 cents, or seven per cent, at $6.11, with over 9.8million changing hands Thursday on the Toronto Stock Exchange.
The drop in share price "absolutely defies any kind of rationalthinking," Bhangui said, but it could be attributed to a few investorstrying to make fast money, who decided to sell when they heard of thesettlements.
"Those fast money guys, that fact is lost on them they think 'Oh this is a one-time wonder and it's no more Wi-Lan,'" he said.
However, Bhangui believes the company will use the proceeds from a $75million financing announced last week to fund "imminent" portfoliopurchases as it waits for the settlement cash to flow in.
Wi-LAN specializes in managing a portfolio of patents and collectinglicence fees from equipment makers that use the technology in theirproducts. It has licensed its intellectual property to over 240companies around the world. The company has a portfolio of around 970issued or pending patents.