Wi-LAN’s V-Chip software jumps from the TV to the PC with CyberLink deal

Ottawa-based tech patent firm Wi-LAN Inc. isn’t about to say just how much money it’s making from software that gives parents control over what their kids can watch on TV. But according to company president and CEO Jim Skippen, a new licensing agreement between Wi-LAN and PC-TV software firm CyberLink Corp. hints at the protective technology’s potential direction and prospects. CyberLink signed a multi-year V-Chip licence in December, indicating that the company would employ the technology in its equipment, which lets people use their computers as TV tuners. It’s a good move for Wi-LAN, Skippen says. “Most of our licensing has been manufacturers of televisions, whereas this is a software supplier.” He explains that this could be the start of something big: more companies associated with the PC industry signing V-Chip licences. “We think that’s a good sign. It shows the potential of a new market.” When Wi-LAN acquired the V-Chip patent in 2007, the deal had everything to do with new market potential. The company merged with Tri-Vision International Ltd., which had already partnered with V-Chip inventor Tim Collings and Samsung Electronics to bring the protection mechanism to TVs. Soon after, Tri-Vision began licensing the technology to TV manufacturers. And then, jackpot: The U.S. Federal Communications Commission (FCC) mandated that all digital TV sets with screens 13 inches or larger and all digital TV receivers without displays must have V-Chip technology. Today, more than 115 companies have licensed the Canadian technology. When Wi-LAN announced that it would buy Tri-Vision, the company said it should be able to pull in $500 million in revenue over nine years, based on growth forecasts. Two years down the road, Skippen is tight lipped about Wi-LAN’s V-Chip track record so far. “I don’t want to specify a number. But we still think there’s significant upside in the hundreds of millions left to sign.” Wi-LAN’s patents cover Canada and the U.S. According to Skippen, many Asian-based electronics manufacturers have signed V-Chip licensing agreements, which is good news he says since most of the world’s TVs are made in Asia. He also points out that although Canada doesn’t have the same strict V-Chip laws as the U.S., most TVs sold here feature the protection software. Wi-LAN released an unofficial report of its financial health on Dec. 10 – unofficial because the company is amending its reporting period, moving its fiscal year-end from October to December, to align with industry common practice. According to this preliminary year-end assessment, the firm recorded revenues of $35.1 million in 2009, up from $26.6 million in 2008. The company says it has convinced 50 more companies sign licence agreements across its complete patent portfolio. Wi-LAN’s V-Chip patent agreements have a lot to do with the company’s court clout. The firm has a reputation for suing companies that use its technology without a licence. But Skippen won’t go so far as to say that’s the main reason for Wi-LAN’s success so far. “I’m not going to speculate on the exact reasons people signed up now as opposed to before, but it is a fact that we’ve signed more licences since the merger than Tri-Vision did in its entire history before that. I think we do have a lot of clout.... I think we have six lawyers on staff. Tri-Vision didn’t have any. We have a lot of money in the bank. We have a history of being willing to litigate in both Canada and the U.S.” This doesn’t diminish Tri-Vision’s efforts prior to the merger, he says. “They had signed a significant number of licences before the merger. We have retained their licensing team. They have been involved in the success of the V-Chip program since the acquisition.” Dev Bhangui, a financial analyst at Haywood Securities Inc. in Toronto, says it’s difficult to track and forecast Wi-LAN’s V-Chip revenue. It all has to do with licences that may be signed tomorrow, next week – or next year. And plenty of those agreements are the result of patent infringement court cases. Timing is a real challenge, Bhangui says. He explains that the more lucrative the licensing deal happens to be – if it’s between Wi-LAN and one of the large electronics makers like Sony or Samsung – the longer it takes to hammer out a deal. “Nobody knows when who’s going to cave in,” he says. He also notes that neither Sony nor Samsung has signed V-Chip licences, which means there may be plenty more revenue left in the TV market for Wi-LAN to collect. Beyond TVs, Skippen says Wi-LAN sees potential in computers, as per the CyberLink deal, and in other kinds of electronic devices. “We are very interested in new applications – broadcasts used in a handset, for instance, or cable boxes, and satellites.”

Wi-LAN’s V-Chip software jumps from the TV to the PC with CyberLink deal

Broadcast | January 4, 2010

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