Wi-LAN buys 17 patents from defunct U.S. firm, strives for industry WiMAX system

Wi-LAN Inc., a Calgary-based provider of broadband wireless communications equipment announced May 21 the acquisition of 17 U.S. patents and patent applications from Ensemble Communications, a now defunct wireless company. This strategic acquisition, according to Wi-LAN officials, brings them closer to the realization of its plan to build the world’s first WiMAX-certified broadband wireless system. Another company priority is strengthening its technology licensing strategy regarding these cutting edge systems. Wi-LAN will pay approximately $5.4 million in cash and $4.9 million in special warrants exercisable into Wi-LAN common shares, in exchange for the patents that are expected to strengthen the Canadian company’s position and licensing capabilities. "We’re expecting a percentage of every Wi-MAX system, so, if the WiMAX system is as successful as we think it is, then we will make many times more than that price," Dr. Sayed-Amr El-Hamamsy, president and CEO of Wi-LAN says. He believes that the new know-how will strengthen both defensive and offensive capabilities to produce new technologies and protect WiLAN’s licensing rights. "On the defensive side, we were concerned that someone else would buy those patents. By purchasing them ourselves, we closed the door for our competitors," El-Hamamsy says. "On the offensive side, first of all, we’re increasing our penetration into the WiMAX standard, because our original patent covers only the physical layer (PHY), and with this one we also cover the MAC layer (Media Access Control layer)." WiMAX broadband wireless system consists of the two layers: the physical layer describes how the data is actually transmitted on the air, and MAC layer interacts with the Internet part of the system, and controls what data goes to the physical layer and when. "It acts like a traffic cop for the data coming in and out of the unit. So, it’s the key piece of the puzzle: you can’t have a system that works without both the MAC and PHY layer," El-Hamamsy explains. Wi-LAN expects that this strategic acquisition will enable the company to produce the first Wi-MAX broadband certified wireless system, and better position the company on the market to sell the equipment:"With the patent, we’ve gained the know-how that’s in the patent, and that also gives us the access to the people who came up with the patent. Now, we can develop our own MAC software, based on the WiMAX standard much faster. So, that would be a part of our being a first to market with WiMAX product," El-Hamamsy says. The acquired Ensemble Communications patents were primarily developed for LMDS (local multipoint distribution services), a system that uses wireless cells that cover small geographical areas, and which requires products that operate on very high frequencies (28 GHz). That market turned out to be a dead end, and the San-Diego-based company shut its doors last April. "The market they were in was not going anywhere, and I believe they realized there was no future, and selling their patents to us was the best way of getting cash for their patents. Also, they have shares in our company. So, they will participate in the growth of Wi-LAN," El-Hamamsy says. "I really believe that WiMAX standard is going to give the kickstart to this market and it’s going to grow to a very large size, so that’s why companies like Intel and Fujitsu are very interested in participating."

Wi-LAN buys 17 patents from defunct U.S. firm, strives for industry WiMAX system

News | June 11, 2004

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