Wi-Lan Plunges on Trial Loss to Ericsson, Alcatel-Lucent

Wi-Lan Inc., (WIN) a Canadian owner of patents for technology used in mobile phones, plunged the most in seven years after it lost a U.S. patent-infringement trial against Alcatel-Lucent and Ericsson AB. (ERIC)

Wi-Lan fell $1.47, or 31 percent, to $3.25 at 4 p.m. today in New York trading for the biggest one-day drop since May 2006 and its lowest price since September 2010. In a statement, Ottawa-based Wi-Lan said it was disappointed and reviewing its options with its lawyers.

Alcatel-Lucent and Ericsson didn’t infringe three Wi-Lan patents, a federal jury in Tyler, Texas, said. Phones made by handset manufacturers HTC Corp. (2498) and Sony Corp. (6758)’s Sony Mobile Communications were cleared of infringement of a fourth patent, according to the verdict form. The patent asserted against HTC and two against Alcatel also were found invalid.

“HTC believes that Wi-Lan has exaggerated the scope of its patent in order to extract unwarranted licensing royalties from entities who have been focused on bringing innovation forward in their own products,” Sally Julien, a spokeswoman for Taoyuan, Taiwan-based HTC, said in an e-mailed statement.

The suit was filed in 2010 over ways to process data transmitted and received over wireless networks. Wi-Lan argued that base stations complying with certain industry standards were using its inventions, allegations denied by Paris-based Alcatel-Lucent (ALU) and Stockholm-based Ericsson.

Jury Confirmation

“We think this validates our belief that Wi-Lan was stretching the boundaries of its patents, and the jury confirmed that belief,” Kurt Steinert, a spokesman for Alcatel-Lucent, said in a statement.

Ericsson said the jury “quickly recognized” that the Wi-Lan patents didn’t apply to the widely used technology and that the Canadian patent owner wasn’t entitled to any damages.

“This is a great win for Ericsson and for the industry,” Kathy Egan, a spokeswoman for Ericsson, said in a statement.

This was the first time one of Wi-Lan’s patent suits have gone to trial. The company typically settles lawsuits that it files to get companies to license its technology, a strategy that brought the stock up 16 percent over the past three months.

The patents originated with a company called Airspan Networks Inc. (AIRO), according to court records.

The case is Wi-Lan Inc. v. Alcatel-Lucent USA Inc., 10cv521, U.S. District Court for the Eastern District of Texas (Tyler).

To contact the reporters on this story: Susan Decker in Washington at sdecker1@bloomberg.net; Beth Mellor in New York at bmellor@bloomberg.net

To contact the editor responsible for this story: Bernard Kohn at bkohn2@bloomberg.net

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