For those who hadn't guessed: Wi-LAN sues Cisco...
...or Radiata, being bought by Cisco: whatever is the latest in Cisco's OFDM shopping spree >smile<
Wi-LAN could be in for the fight of its life
By MATHEW INGRAM
Globe and Mail Update
Wi-LAN Inc. of Calgary is in for what could be the fight of its life, and it's not just facing any old adversary — it's going up against one of the world's largest companies. Although the lawsuit it recently launched names a small California company, that company happens to be in the process of being bought by the mighty networking equipment giant Cisco Systems, which boasts a market value of more than $370-billion (U.S.).
This fight has been a long time in the making. Not long after Wi-LAN Inc. moved from the Alberta Stock Exchange to the Toronto Stock Exchange in November 1999, it got a major boost in visibility from Cisco, when the San Jose, Calif.-based company said it was launching a line of high-speed wireless products — products that appeared to be based on a technology similar to the one that Wi-LAN's two co-founders patented back in 1992.
Rumours that Cisco might buy Wi-LAN in order to get access to the company's technology — known as wide-band orthogonal frequency division multiplexing, or W-OFDM — helped push Wi-LAN's stock up initially, but it soon became clear that the networking behemoth had no such intentions. It launched its own version of the technology with much fanfare, and said that it didn't believe Wi-LAN's patents would have any effect on those plans.
It didn't turn into a public battle at the time, but it was obvious that Wi-LAN and Cisco would clash again over the issue, and that the Calgary company would eventually have to put its money where its mouth was in terms of its patents. That has now happened, with the news that Wi-LAN is suing a company called Radiata for more than $780-million (Canadian).
This is not just a side project for a company that has lots going on in other aspects of its business. Wi-LAN's future prospects rest almost entirely on its ability to license its technology to telecommunications and networking companies, and that in turn depends on its ability to defend its patents. It's no exaggeration to say that the outcome of this case could determine Wi-LAN's entire future, especially since its stock has plummeted to a recent $17 from an all-time peak earlier this year of $94.
Wi-LAN — which was founded in 1992 by a university researcher (Michel Fattouche) and a telecom company researcher (Hatim Zaghloul) — is suing a company called Radiata, which was created in 1997 by two university professors in Australia. Cisco Systems said just two weeks ago that it had agreed to buy the 89 per cent of the Australian company it didn't already own for $295-million (U.S.) in Cisco shares.
Radiata has been promoting high-speed wireless networking products that work on a technology it calls code-based OFDM. Just to make things extra confusing, this appears to be slightly different from the technology Cisco announced last fall — the announcement that got investors excited about Wi-LAN to begin with. Cisco's news in November 1999 involved vector-based OFDM, technology the networking giant acquired when it bought a privately-held U.S. company called Clarity Wireless in 1998 for $150-million.
In a news release in June, Wi-LAN made it clear that it believes any wide-area variation on OFDM — whether based on vectors or codes or pretty well anything else — infringes on its patents. The company said that it had conducted a legal review that upheld its position, but the lawsuit against Radiata is the first test of that belief.
Wi-LAN is asking for compensation, including punitive and other damages, and an injunction preventing Radiata or its partners from selling products that infringe on the patents.
Orthogonal frequency division multiplexing is a way of transmitting a signal over multiple channels simultaneously, a technology that has been around since the 1960s but has never been used much because it suffered from what are called "multipath" effects, in which signals bounce off buildings and other objects and interfere with each other. Wi-LAN's technology uses computing power to overcome that problem, and actually takes advantage of the multipath effects to increase the efficiency of the transmission.
OFDM was adopted by the international standards body IEEE earlier this year as the standard for next-generation high-speed wireless networking, a standard known as 802.11a — the successor to an earlier standard, confusingly known as 802.11b. While the earlier standard supported wireless networking speeds of up to 11 megabits per second, about five times as fast as a cable modem or DSL connection, OFDM supports speeds of 54 mps.
A substantial part of Wi-LAN's business model is based on licensing its W-OFDM technology to various networking equipment suppliers, in the same way that Qualcomm Inc. has been able to live off its patents on the CDMA (code-division multiple access) standard, which is used in cellular telephones. But first, Wi-LAN has to prove its patents cover what it says they cover — and that's why the Radiata suit is one fight it has to win.
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