Cantech Letter interviews Jim Skippen of WiLAN (TSX:WIN)

Skippen: "When I was at Mosaid one of the portfolios I looked at when I was Senior VP of patent licensing was the WiLAN portfolio. I liked it and I tried to buy it and I was unsuccessful. About six months later a group came to me and asked if I would be interested in heading up my own pure-play patent licensing company in WiLAN."

Missed it by that much.

This morning Nick Waddell of Cantech Letter snagged a lengthy interview with Jim Skippen, CEO of runaway Ottawa-success story Wi-LAN (TSX:WIN).

Wi-LAN now has nearly fifteen-hundred patents and has already licensed their technologies to blue chip techs such as Cisco, Nokia, Panasonic, and Samsung. In doing so, Wi-LAN’s revenue has climbed from just over $2 million in fiscal 2006 to over $50 million in 2010, and more than that in the first two quarters of fiscal 2011.

After a few friendly shots about Cantech Letter’s excessive coverage of rival Mosaid Technologies, Waddell and Skippen had a rambling chat about patent reform, the Ottawa tech scene and ringing the opening bell at the Nasdaq. And then, less than two hours later, Skippen announced that Wi-LAN intends to make a formal all-cash offer to acquire all the outstanding common shares of former Skippen employer Mosaid Technologies for approximately $480-million.

Jim, this year you have, among other things, rung the opening bell at the Nasdaq and become the largest tech company in Ottawa by market cap. It has been a whirlwind of a year. Have you had time to sit back and take it all in?

You know, Nick the truth is that since I got to Wi-LAN five years ago we have been steadily building, and working hard the entire time, so it doesn’t really feel like a whirlwind it just feel like things are on track and moving along the way we had hoped given the seeds that we had planted five years ago…

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I guess in the markets you can be doing a lot of good work without seeing results in your share price and then all of a sudden everything that you have been working towards shows up in a very short period of time.

Yes, that is exactly the way it works

Jim, what do you feel is the strength of Wi-LAN’s patent portfolio? Where is the sweet spot for you?

Well, Wi-LAN initially had a small but potent group of wireless patents that had applicability to wiFI and wiMAX and we have really built on that core. We now have over a thousand wireless patents and over five-hundred that relate to 4G technologies, including LTE. I would say that is where most of the strength in the WiLAN portfolio lies.

I noticed that prior to the recent sale of the final Nortel patents that Mike Lazardis said that Nortel’s LTE patents were a national treasure. Do you share that opinion?

I don’t know whether I would characterize it that way. I think they had some valuable patents, I don’t know if I would go so far as to say they were a national treasure but it was a valuable patent portfolio.

Let’s talk about Mosaid for a second. Do you feel there is a reason why there are two Ottawa based companies who focus on defending a stable of patents that are having success at the same time, or is that a coincidence?

Well I was at Mosaid for ten years and worked on building that program and led it up until the time I left five years ago. When I was at Mosaid one of the portfolios I looked at when I was Senior VP of patent licensing was the WiLAn portfolio. I liked it and I tried to buy it and I was unsuccessful. About six months later a group came to me and asked if I would be interested in heading up my own pure-play patent licensing company in Wi-LAN. At the time Mosaid was operating more or less as a conglomerate with patent licensing and two other businesses and I was interested in being CEO of a stand alone patent licensing business. Of course since that time Mosaid has jettisoned the other businesses and all that is left of Mosaid is my old department, more or less. So I would say that’s a big reason why there are two successful patent licensing companies in Ottawa.

Interesting. With the sale of the Nortel patents there was a lot of talk beforehand about the potential acquisitor making the move as a defensive one. Kent Walker from Google said that he saw Google building its patent portfolio as a deterrent against frivolous lawsuits. And Google, for one, had lobbied for years for patent reform. Do you think the purchase of the Nortel patents and Google’s recent purchase of Motorola Mobility is an admission that the efforts to reform patent law was misguided?

I wouldn’t go so far as to say that the two are connected but I think what it does tell you is that large operating companies see a lot of value in acquiring patents that were invented somewhere else, by other companies. They’re not buying them to protect their own products, they’re buying them presumably to use in litigation against companies if they need to.

What has changed with regard to patents? Everywhere I look now, especially in the past year, maybe even in the past six months in particular that there is a hyper-focus around the value of patents worldwide…

Well I think that is a logical thing because if you think about manufacturing and the way China has taken off. They’re good at manufacturing products but in the end the real value is in the inventions that make those products possible; ie the patents. As it turns out of you look at Nortel and you look at the money that the sale of the patents generated, the patents generated more than all the other parts combined, which highlights that the real value is in the patents. For me, personally this isn’t a new revelation. It’s the reason that for many years at Mosaid and now WiLAN I had been advocating that a company that focused just on patents could be a very, very profitable viable company because that’s where the real value is. I think what is happening is that the rest of the world is catching on to it, but for me it’s nothing revolutionary or new.

So you weren’t surprised by the sale price of those Nortel patents?

(Laughs) I won’t say that. I was surprised that it was so high. It’s interesting and it definitely has done a lot to highlight or shine a bright light on our sector and our business and I think that’s good and well deserved for us.

I am still surprised I guess that Nortel couldn’t make a go of it as a business. It’s a little depressing that there seemed to be so few skills as an operator to make the business work. And when you are talking about companies getting bailed out left and right in the crisis of 2008 why shouldn’t Nortel have gotten a bailout?

That’s a good question, but I obviously think there was some very serious mismanagement at Nortel that went on. From my understanding Nortel was spending a lot of money buying companies adding to its expense level and those companies failed to generate the revenues that were expected and in the end all Nortel was left with was this huge expense base and no offsetting revenues. It was just mismanaged, but you’re right it was a good hotbed of technology development. It was good for Canada, it was particularly good for the Ottawa area and it was disappointing that isn’t continuing.

Click Here for PART TWO of Cantech Letter’s interview with Jim Skippen of Wi-LAN.

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