Plaintiff Wi-Lan Loses Big Patent Infringement Suit Against Apple

Last week, Canadian company Wi-Lan Inc. (WILN) lost a $248 million patent infringement suit against alleged infringer Apple Inc. (AAPL). On October 23, a Texas jury ruled that Apple did not infringe Wi-Lan’s U.S. Patent RE37,802 entitled “Multicode Direct Sequence Spread Spectrum,” and also determined that independent claims 1 and dependent claim 10 of the patent were invalid, to add insult to injury. This is the second legal blow to the intellectual property licensing company in less than a year, with the first coming in a July trial they lost against such tech giants as HTC and Sony.

The company put out a statement shortly after hearing the verdict: “Wi-LAN is disappointed with the jury’s decision and is currently reviewing its options with trial counsel.” The company further stated that they “[do] not believe previous license agreements signed related to the patents are negatively impacted by this decision.”

One of the options that has been presented includes a potential sale of the company. Additionally, Wi-Lan is also considering an appeal of the ruling, looking perhaps to relitigate the case against Apple. An appeal may be a risky endeavor though, both in terms of legal fees and stockholder confidence. As a company that lives only on the patent royalties and settlement agreements it procures, losing in the courtroom, especially one as plaintiff-friendly as the Eastern District of Texas, virtually ensures a sizeable loss in stock market trading value. This held true after the July ruling, too. As of now, Wi-Lan cannot afford the negative publicity and stockholder backlash against losing a third trial.

But it is unclear just how much the lost suit against Apple will hurt the company’s overall worth in the long term, as the infringement suit in question weakened just one of the over 3000 patents Wi-Lan has in its portfolio. Moreover, each of the other companies sued by Wi-Lan, including Dell Inc., Hewlett-Packard Company, and Novatel Wireless, Inc., negotiated settlements and future licensing agreements. Nonetheless, stockholders have been in a selling frenzy the past week and a half (October 23-November 3), with Wi-Lan’s stock dropping approximately 26% on the NASDAQ from $4.24 to $3.14 in that period. Additionally, the costly litigation may contribute to a lower than expected third quarter haul, though we will have to wait and see if that is the case on November 6, when Wi-Lan announces their Q3 financial results.

Remick Stahl
Law Clerk at
JAFARI LAW GROUP®, INC.