Cisco Sued over 802.11a/g Product Sales

By Eric Griffith

June 23, 2004

Wi-LAN wants to license its intellectual property to wireless chip vendors. It plans to get their attention by suing networking giant Cisco in Canada for infringing on OFDM patents found in the 802.11a/g standards.

Wi-LAN, a Canadian company that makes broadband wireless equipment, is trying to make a name for itself for the future WiMax market.

It may also end up making just as big a name for itself in the courts. The company said today that it is suing network giant Cisco Systems in Canada for patent infringement. This is the second time they've sued them, in fact.

Wi-LAN was established in 1992 based in part on patents on Orthogonal Frequency Division Multiplexing (OFDM) filed by its founders. The patents specifically cover wide-band ODFM (or W-OFDM). The Canadian patent number is 2,064,975 and the United States patents are No. 5,282,222 and 5,555,268. According to Ken Wetherell, vice president of corporate communications at Wi-LAN, W-ODFM is part of the very foundation of the Physical Layer of the 802.11a and 802.11g specifications.

In 2000, Wi-LAN took a company named Radiata to court for selling pre-certified 802.11a products in Canada. This coincided with Cisco buying the company. Wetherell says that Cisco successfully argued that no actual 11a products were available at the time and that it had no intention of selling 11a products in Canada in the future. The suit was dropped.

Of course, since then, not only have Cisco's own Aironet WLAN products become easily available in Canada, it also bought Linksys, the largest seller of consumer WLAN products in North America and the world -- most of which are 802.11g or dual-band 11a/g.

"We felt it was appropriate at this time to go back to Cisco and seek royalties," says Wetherell.

Cisco's official comment on the lawsuit is: "Wi-LAN claims that its patents are related to industry standards and appears to be applying the patents to the Wi-Fi industry as a whole. We will respond as appropriate after reviewing the claims."

Part of Wi-LAN's future revenue plans hinge on licensing its intellectual property (IP), and this move is their way of escalating that program. The company just settled a suit against Redline Communications in May, in which Redline agreed to pay royalties to Wi-LAN without admitting any wrongdoing. The two-year-old suit revolved around the same W-OFDM patents.

Earlier this month, Wi-LAN said it had purchased 17 U.S. patents and patent applications for U.S. $3.9 million in cash and $3.6 in special warrants that could be exercised into Wi-LAN shares. The seller, revealed as Ensemble Communications, will have the option to license the patents in the future... but the company appears to be defunct. The purchased patents relate to the media access control (MAC) layer of the various 802.16 standards, which are high-speed, long-distance wireless specifications that will see use under the umbrella "brand name" of WiMax.

Wi-LAN is working with Fujitsu Microelectronics America to make WiMax sample chips available that they hope to have in testing by the end of the year -- Fujitsu will pay Wi-LAN a royalty for use of its IP.

Wi-LAN has a similar deal with Philips for its development of 802.11a and 11g chips (done without litigation).

This current litigation against Cisco is Wi-LAN's way of drawing the attention of what it sees as the real patent infringers: the wireless LAN chipset makers.

Wetherell says they could go after the likes of Broadcom or Atheros , two leading Wi-Fi chip vendors, but would run the risk of the defense being, "we don't know where are chips are sold." Cisco can't say that. Plus, by going after a large player like Cisco, Wi-LAN expects to eventually set a precedent that will bring more players to the table.

"We don't want to do the Qualcomm thing and go after every product builder. We want the large chip makers," Wetherell says.

By bringing the lawsuit in Canada instead of the U.S., Wi-LAN will be in a country where the cost is lower and the onus is on the defendant. He says, "If there are any smoking guns -- and we don't expect to see any -- then you get to see it up front and formulate your attack on that basis." Plus, it would set a precedent that could be viewed for future patent suits in the U.S. if needed.

Ultimately, Wetherell says his company wants to stay out of the courts and just get "reasonable royalties, typical fees that would be paid for any IP.... We think we can settle this quickly and move on. Our main business is enabling wireless broadband equipment, but our shareholders expect us to protect our patents."



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