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Ottawa Citizen : More battles in patent wars

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More battles in patent wars


BY BERT HILL, OTTAWA CITIZENMAY 11, 2011


Life is getting more complicated for Mosaid Technologies and Wi-LAN, two Ottawa leaders in the technology licensing business.
First, Google locked up the 6,000 Nortel Networks patents with a $900-million tentative deal that may wind up being the starting point for a possible auction next month.
Mosaid and Wi-LAN had hoped that the Nortel patents would sell in numerous packages to a variety of buyers.
That would have allowed them to buy some directly -or in secondary sales -and then force other companies to pay licences for the use of the technology or face lawsuits.
But cash-rich Google foiled that strategy with a single big bid and will be tough to top in an auction.
Now RPX Corp. of San Francisco has launched a successful initial public offering that raised more than $160 million.
Its goal is to frustrate companies like Mosaid and Wi-LAN by buying up patents to protect big, rich clients like Google, Cisco, Nokia, Panasonic and Samsung from patent lawsuits.
It's a very special insurance business in big demand. RPX revenues jumped threefold to $94.9 million last year and profits rose sixfold to $13.9 million. RPX already owns 1,500 patents and plans to buy more. Some think it will bid against Google for the Nortel patents, but it would need many partners with very deep pockets. Its stockpile of patents is more than Wi-LAN's 1,300 patents but less than Mosaid's 2,600.
With a stock market capitalization of $1.23 billion, RPX is now 20-per-cent bigger than the two Ottawa competitors combined.
The two Ottawa companies both have big war chests to buy more patents and pay sky-high legal costs. Wi-LAN is seeking a Nasdaq market listing to boost its exposure and stock price.
Mosaid has appointed John Veschi, Nortel's chief intellectual property officer, to the board of directors. He is playing a key role in the sale of Nortel's patent portfolio. Prior to joining Nortel in 2008, he ran intellectual property operations at LSI, which sold key wireless patents to Mosaid, allowing it to diversify a highly specialized portfolio. Mosaid said it is not involved in the Nortel auction.
Investors clearly love the opportunities in the battle between the so-called patent trolls and technology fat-cats. It's all a matter of perspective. The defenders of legitimate patent rights against rich pirates stealing technology can also be seen as the throttlers of innovation exploiting prosperous companies that actually invest in research and product development. It is all a question of how the argument is spun.
But companies can work both sides of the street in this war. Intelligent Ventures, an older Seattle-area company with a mandate similar to RPX, recently filed suit against McAfee, Checkpoint and other security software companies for alleged patent violations. It is the creation of Nathan Myrvold, a former Microsoft chief technology officer. He has invested $5 billion in more than 30,000 patents since 2000. Several RPX founders were once involved with Intelligent Ventures before they got backing from legendary California venture investor Kleiner Perkins to launch in 2008.
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Thermal Energy International, an Ottawa company with a long history of regulatory issues, is sending its directors to school to learn how to run a company. It's a condition the Ontario Securities Commission imposed to try to bring order to a company with a promising product portfolio but chaotic management history. In addition, the company has to add two new directors with track records that meet OSC rules. The latest investigation forced a restating of financial results and the OSC found Thermal loaned officers and directors more than $2 million to buy stock options and private placement shares and paid officer expenses without proper disclosure.
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Mark Goudie, a former chief financial officer with WorldHeart and the Ottawa Senators hockey club, is the executive vicepresident of operations at Clearford Industries, the Ottawa company now selling advanced sewage treatment gear in the developing world. Donnie Moore, a former senior vice-president of Cognos, has joined the board of Craig Wireless Systems, a California hardware company. Pat Foody Sr. has won the lifetime achievement award from the Society of Industrial Microbiology for his working commercializing biofuels at Iogen, a company he founded. Tony Bailetti, a Carleton University professor, won the Ottawa Innovation Community Award for 2011 for his work helping a new generation of startups rise from the ashes of Nortel Networks and other struggling companies.
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Esterline Technologies, the Seattle-area company that owns CMC Electronics of Ottawa and Montreal, is spending $715 million to expand a military and industrial sensors and systems operation. It is buying Souriau Group of Versailles, France, which brings sales of $350 million primarily in Europe, and more than 2,300 employees.
JDS Uniphase is predicting sales will decline by two to four per cent in the June quarter compared to the March quarter. Investors were heartened that JDSU is predicting a brief slowdown and worried that other competitors will have a rougher ride from a slowing economy. Sales jumped 86 per cent in the March quarter and it turned a profit of $39 million, compared to a loss of $12 million a year earlier.
Contact Bert Hill at [e-mail].
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