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Senior U.S. Correspondent

Wi-LAN sues Cisco over wireless patents

Jun 24, 20044 mins
Cisco SystemsFinancial Services IndustryMobile

Wi-LAN, a Canadian wireless network vendor, filed a patent lawsuit against Cisco on Wednesday and is taking aim at much of the wireless LAN business as well as the emerging wireless broadband industry.

Wi-LAN, a Canadian wireless network vendor, filed a patent lawsuit against Cisco on Wednesday and is taking aim at much of the wireless LAN business as well as the emerging wireless broadband industry.

The suit, filed in Canadian federal court in Toronto, claims Cisco is using Wi-LAN technology in its IEEE 802.11a and 802.11g products without a license from the company. Wi-LAN is seeking unspecified punitive damages and compensation for use of its intellectual property (IP), the company said in a statement Wednesday.

However, the Calgary-based company’s strategy doesn’t end there. Wi-LAN invented a two-way, wideband OFDM (Orthogonal Frequency Division Multiplexing) technology that is fundamental to 802.11a and 802.11g as well as WiMax wireless broadband equipment, according to Ken Wetherell, vice president of corporate communications at Wi-LAN.

“We expect to eventually be collecting royalties from all 11a and 11g semiconductor companies,” Wetherell said. The company may sue other vendors if it can’t reach licensing agreements with them, he said.

The 802.11a and 802.11g standards cover the two types of Wi-Fi equipment that have a maximum carrying capacity of 54M bit/sec. WiMAX, based on the IEEE 802.16 standard, is designed for networks that can match DSL and cable modem speeds at distances as great as 30 miles. The WiMax Forum expects to begin certifying WiMAX equipment by the end of this year.

Wetherell said Wi-LAN made its move against Cisco after settling a suit against Redline Communications, a Markham, Ontario, vendor of wireless broadband equipment that is developing WiMax gear. The company agreed to pay Wi-LAN royalties on its wireless products. Wi-LAN also has licensing deals with other vendors including Philips Semiconductor International and Fujitsu, Wetherell said.

No court date has yet been set for the case, which might be tried in either Toronto or Calgary, he said. The next step is for Cisco to file a response to the complaint, he said.

Wi-LAN is not looking for a huge punitive award, Wetherell said.

“We’re not trying to slow the market down, we’re not trying to slow down the adoption of this technology, we’re just looking for a reasonable return on our IP,” Wetherell said.

Indeed, stalling the wireless industry would work against the company’s own interest, said Abner Germanow, an IDC wireless analyst.

“If you make the technology too expensive because of the royalty, and the royalty is based on the volume of sales, then the royalty can’t be so large that it inhibits sales,” he said.

Wi-LAN said Cisco uses its technology in Aironet enterprise WLAN gear as well as consumer and small-business WLAN products made by the Linksys division. Wi-LAN believes those products violate both Canadian and U.S. patents, Wetherell said.

The company is pursuing Cisco in Canada because it finds the legal rules there advantageous and it tends to be less expensive to sue in that country, Wetherell said. This is partly because damage claims tend to be lower in Canada, he said.

“Even if we go a few years on this thing, it won’t cost us more than a few million Canadian dollars,” Wetherell said.

Publicly traded Wi-LAN had revenue of about CDN$26 million ($19 million) last year, most of that from sales of wireless equipment, Wetherell said. The company kicked off its legal campaign after emerging from the financial pressures of the networking downturn.

“We kind of retrenched for a few years. Now we’re back in the position where we have a strong balance sheet and we can afford to defend our IP again,” Wetherell said.

IDC’s Germanow isn’t surprised to see suits over wireless technology.

“Every time a technology starts to grow, everybody and their brother goes and opens up their patent portfolio” to find patents that are being used in the new technology, Germanow said.

Cisco did not immediately respond to a request for comment on the case.