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Apple Wins Patent-Infringement Trial Against Wi-Lan

Apple Inc. (AAPL) won a patent-infringement trial in which Wi-Lan Inc. was seeking $248 million from the iPhone maker over an invention for wireless technology used in mobile devices.

Apple didn’t infringe a patent for technology used in wireless networking, a federal jury in Marshall, Texas, said today. The jury, which deliberated for just over an hour, also said the two patent claims were invalid.

Wi-Lan said it was reviewing its options, and that it “does not believe previous license agreements signed related to the patents are negatively impacted by this decision.” Kristin Huguet, a spokeswoman for Apple, didn’t immediately return messages seeking comment.

Wi-Lan relies on royalty payments for all of its sales. Justin Kew, an analyst with Cantor Fitzgerald, called the case “pivotal” because an agreement with Cupertino, California-based Apple might eliminate much of the company’s litigation costs that have led to quarterly losses.

Wi-Lan reported a loss of $762,000 in the second quarter on revenue of $19.9 million, with litigation expenses accounting for much of its costs.

The company’s shares have fluctuated with its patent suits. An agreement announced with Samsung Electronics Co. sent it up 11 percent in June, while a trial loss against Alcatel-Lucent SA and Ericsson AB over different patents related to wireless transmissions sent the stock down 31 percent in July.

Photographer: Craig Warga/Bloomberg

Apple Inc. didn’t infringe a Wi-Lan Inc. patent for technology used in wireless networking, a federal jury in Marshall, Texas, said today. Close

Apple Inc. didn’t infringe a Wi-Lan Inc. patent for technology used in wireless... Read More

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Photographer: Craig Warga/Bloomberg

Apple Inc. didn’t infringe a Wi-Lan Inc. patent for technology used in wireless networking, a federal jury in Marshall, Texas, said today.

The shares were halted at 1:08 p.m. New York time, as the jury began deliberations, and didn’t resume trading.

IPhone Value

Apple argued that it uses chips made by Qualcomm Inc., which doesn’t use the Wi-Lan technology. Mark Scarsi of Millbank Tweed in Los Angeles told the jury that Wi-Lan valued the patent at $4.3 million in 2006 and now wants a big payout by demanding a cut from every iPhone sold.

“They are claiming the entire value of the iPhone, including the charger -- that’s why they are suing Apple and not Qualcomm,” Scarsi told the jury in closing arguments. “You haven’t been fooled. You know what’s right.”

Apple is “slinging mud” because it needs the technology and knows it has to take a license to the patent, Sam Baxter of McKool Smith in Marshall, representing Wi-Lan, told the jury.

“The competitors were going to eat their lunch,” Baxter said. “They had to take a license. Think about the 122 million phones they would not be able to sell without a license.”

The Ottawa-based company reached agreements with HTC Corp., Hewlett-Packard Co. and Novatel Wireless Inc. in the days before the trial for undisclosed terms. That left Apple the sole defendant. Apple, which denied infringing the patent, argued it didn’t cover anything new over prior know-how.

BlackBerry Ltd. settled its fight with Wi-Lan, as did Alcatel-Lucent.

The case is Wi-Lan Inc. (WIN) v. HTC Corp., 11cv68, U.S. District Court for the Eastern District of Texas (Marshall).

To contact the reporter on this story: Susan Decker in Washington at sdecker1@bloomberg.net

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

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