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Summary:

Most Americans have never heard of a company called WiLan, but that company is now claiming that it should get a cut of many of the cable mo…

Cable modem and iPhone
photo: cogdogblog

Most Americans have never heard of a company called WiLan, but that company is now claiming that it should get a cut of many of the cable modems sold in the U.S. The Canadian company, which used to make wireless products, now makes its living suing companies for patent infringement. This week, it sued Comcast (NSDQ: CMCSA), Charter (NSDQ: CHTR), and Time Warner Cable (NYSE: TWC), saying those companies use cable modems that infringe a patent it bought in 2007.

This is far from WiLan’s first time in court, but it does appear to be the first time the Ottawa-based company has gone after cable companies, and the first time it has sued over this patent, which it acquired from the two California inventors, Larry Wagner and Peter Moss.

WiLan was founded in 1992 as a wireless company, but didn’t make it in the marketplace. Since 2006, it’s focused on buying patents and licensing them, which has grown its revenue from a bit over $2 million in 2006 to $35.4 million in 2009. WiLan is one of a few public patent-enforcement companies, and its stock is traded on the Toronto Stock Exchange.

It’s an interesting choice by WiLan to go after the cable companies, which don’t manufacture their own cable modems or have much to do with their designs. But patent law allows a patent-holder to go after anyone who makes, uses, or sells a patented invention, which gives a company like WiLan a wide choice of targets.

Suing three giant cable companies allows WiLan to pursue damages on a large scale, and it might be easier than going after the numerous modem manufacturers. Those modem makers may yet be sued over this same patent, which claims to cover the DOCSIS standard, or the protocol that all cable modems use. By naming that standard in its complaint, WiLan is making clear that it believes that every cable modem in the U.S. is a violator of its patent, and thus a potential target. This is not to say that WiLan is at all likely to go after individual users, but it speaks to the scope of the complaint.

WiLan has filed more than 20 patent infringement lawsuits since 2007-but previously it has sued over wireless broadband standards like 802.11 and 3G. The cable companies, which are huge and important customers of companies like Arris that actually made these modems, will likely ask for the modem manufacturers to indemnify them in this suit. That could take the form of direct intervention in the lawsuit, or they might get asked to quietly foot the sizeable legal bills that will result from this suit.

WiLan’s latest lawsuit, like most of its other lawsuits, was filed in East Texas, a venue whose courts and juries are considered friendly to patent plaintiffs. The company has hired the McKool Smith law firm, which is responsible for more than its fair share of the big patent verdicts in the past few years, including two East Texas verdicts against Microsoft-on behalf of VirnetX Holdings and i4i-which totaled more than $400 million.

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  1. What about cable modems manufactured before 2007 – at which time it was sold to WiLan – subject to vagaries of patent sale and enforcement after the fact? If WiLan did not commence enforcement of their patent rights until late 2010, how are the modems made 2007-2010 different from those made before? Obviously I am not a patent lawyer, but cannot fathom how a patent can be sold and then subject the companies and services who used and licensed the patent to penalties which previously hadn’t applied.

  2. @MattR, if any companies actually paid for a license to the patent pre-2007, that license should stay in place even after the patent changes hands. So those companies could not be sued.

    But it’s much more likely that this patent simply wasn’t enforced until now. Before 2007 it was owned by a few different small entities, which were probably under the control of the two inventors.

    The patent was filed in 1997, and the patent owner is allowed to claim up to six years of damages, by law—whether the alleged infringers knew about the patent or not.

  3. suing over a format…that’s ridiculous…so anyone who uses .mp3 as a format should be sued, what a joke..802.11 protocols were founded in the 1980, in America, I went to school for this stuff…802.11 got its name from the date it was founded: February 11th , 1980 , if some research was done by this company claiming to own these formats, they would not try suing over what is not theirs

  4. John, you have no idea what you’re talking about… IEEE802.11a/g/n Standard did not pass until late 1990’s and early 2000’s… Wi-LAN was instrumental in voting for the Standards and had notified the IEEE members that it had fundamental patents in this area promising (FRAND) Fair licensing terms to companies planning to use the technology… I suggest you do some due diligence… Ask Intel (and gang), why they are being sued in E. Texas… and why they will lose big time comes January 4, 2011.

  5. DHT, You are not an authority either or a glorified bully. Open Standards are meant to be implemented for the benefit of the end users. Company voted for their so called proprietary standards to go main stream for their benefit. They should make products and sell them instead of taking this route to sue other companies who have maximized it potential. Remember Verizon suing Vonage. Companies try to prevent their technology from use for the fear of losing the benefit they have vested in currently. New technology may make them obsolete. However, they patent them and then try to run their competitor if they are in infringement. Most of the patents applied are silly. It should be applied on a break through and not tweaks of the break through to present old wine in a new bottle.

    As a side discussion we know that the US government owns every development it has nurtured be it in internet, wireless, spread-spectrum or medical research. They own the rights on every product commercialized from. US G should go after those companies to get their due sure. This will wipe out our deficit.

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