With a third of its staff gone in a restructuring, one might think growth could be a challenge for Ottawa patent player Wi-LAN (TSX:WIN, Nasdaq:WILN). But the company’s boss says he thinks it is set up to resume its once impressive trajectory.
Wi-LAN CEO Jim Skippen was in Toronto Tuesday to present at the Cantor Fitzgerald Growth Conference. Skippen detailed how the company has changed its business model from owning patents to licensing portfolios owned by other companies. The model, which Skippen described as “risk sharing”, entails taking on the license of portfolios from a wide range of industries, requiring the companies that own them to “delay gratification” and get paid only on success, and also requires law firms it employs to work on contingency.
The result, notes Skippen, was a reduction of legal expenses from $45-million in 2013 to just $10-million the following year.
“Five years ago we paid 100% of our legal costs up front. Now the law firms don’t get paid unless we win. It affects the margins, but the return on capital is much, much better,” he said.
Today, Wi-LAN has just 47 employees but is currently running 60 litigations, more than the company has ever taken on. And they’re in businesses they’ve never been in before, including gaming, digital television, semiconductors, point of sales, microscopy, irrigation control, and vending machines. It’s what Skippen describes as a “professional patent management and licensing company”. The idea came about when the company launched Gladios IP, a division intended to work with other companies to try and unlock the value of their patents, launched its first lawsuit in the early days of 2012.
Skippen says Wi-LAN today is essentially an entire company based around the idea of Gladios IP. And he thinks that means the company’s growth potential is poised to resume, estimating that it is in front of revenue potential of $525 to $840-million. He says Wi-LAN has built a brand in patent licensing that means a lot of business comes their way; the company has already struck deals with the likes of Yamaha, Toshiba, Samsung, Philips and Sony.
Skippen says Wi-LAN Version 2015 is uniquely qualified to provide a service that is in great demand; a turnkey solution to companies looking to monetize their patent portfolios.
“Essentially they partner with us and sit and wait for their dividend cheque,” says Skippen.