Fraser Mackenzie
Wi-LAN
December 9, 2011

Digital TV Patents Acquisition Puts Pressure on the Big Five OEMs to Settle

WIN just announced that it has acquired a global portfolio of more than 1,400 patents and applications related to digital TV and video displays. The patents were acquired from an international consumer electronics manufacturer for a purchase price of US$8.0 million in cash.

We are not surprised by the announcement given that WIN has a history of acquiring patent portfolios and subsequently parleying the amount spent into larger licensing streams. We have seen the company achieve this with its wireless portfolio. This acquisition is positive, strengthening the company’s patent position by doubling it from 1,400 to 2,800.

Thus far, on the digital TV side the company has solely had V-chip patents. While WIN has signed several TV settlements in 2008-2010, the top five TV OEMs have not yet signed. Additionally the newly acquired patents provide WIN strength in numbers in its pursuit of licenses with the five top OEMs- Sony, Sharp, Samsung, Toshiba and LG. The big OEMs will be incentivized to come to the table as WIN battles them on multiple fronts. Hence making it difficult for the counter parties to decide to pursue a trial.

It appears LG is the closest in terms of reaching a settlement with the company and this acquisition further nudges it to finalize the license.

We reiterate that WiLAN continues to trade at compelling levels and our belief has been endorsed by a NCIB, just announced by the company. Wherein WIN will purchase up to 6,183,347 common shares, or 5% of its issued and outstanding shares. The bid is subject to achieving regulatory approvals. The NCIB is expected to commence on December 14th, 2011 and will expire on March 31, 2012. Daily purchases will be limited to 263,077 shares.