WiLAN Acquires the Qimonda IP Portfolio

On June 2nd WiLAN purchased the Qimonda patent portfolio from Infineon, which they followed immediately with an announcement that they had already signed a licensing deal for the portfolio with Samsung. WiLAN purchased the portfolio for approximately €30 million or close to $33 million, receiving in return over 7,000 patents and applications covering  DRAM, FLASH memories, semiconductor processes, semiconductor manufacturing, lithography, packaging, semiconductor circuitry and memory interfaces.

The purchase is notable for its size if nothing else. WiLAN expects the portfolio to yield $100 million in revenues over its lifecycle, which is about eight years on average. If that estimate proves accurate, WiLAN will reap a return of almost three times its investment. Immediately following its dual announcements, WiLAN revised its expected second quarter revenue from at least $18.3 million to over $34 million.

WiLAN stated that they believe a significant portion of today’s global microchip production is at least partially covered by claims associated with patents in the Qimonda portfolio. According to Jim Skippen, President & CEO of WiLAN "This is WiLAN's most important patent acquisition to date… Portfolios of this magnitude and quality rarely become available and it is always an important event in the patent world when one changes hands.”

When sale  of the portfolio was initially discussed some analysts expressed concerns over  the number of encumbrances on the portfolio, which US courts had already reviewed and insisted remain in place. Those previously agreed upon licensing deals included one with Samsung Electronics. However, with it’s purchase of the portfolio, WiLAN was able to negotiate a new agreement including much wider coverage for Samsung’s  businesses.

For WiLAN deals like the new Samsung agreement are especially important given its rocky recent past. After losing a crucial LTE case against Apple WiLAN saw its stock fall 9.9% in the first trading session following the announcement of the loss. Acquisitions and deals like those announced this month will go a long way towards ameliorating that loss.

However, it should be noted that when looking at WiLAN’s $100 million revenue projection for the portfolio, there are a few factors that could put a dent in that margin. As always with IP, there is the possibility of high litigation costs eating away at profits. Also a number of the assets are still patent applications with associated maintenance costs. So while the Qimonda portfolio continues to look like a good deal overall for WiLAN it will be interesting to watch how events unfold as WiLAN moves to monetize their new assets.