Marking the end of a pivot away from patent monetization, Canadian company Quarterhill Inc. has sold 90% of its licensing arm, Wi-LAN Inc. (WILAN), to a pair of New York-based investment firms. According to a press release issued on June 15, Quarterhill stands to earn up to $54M ($71.4M CAD) from the deal, although WiLAN will be required to meet certain revenue milestones in order for the company to get that maximum earn out.

Under the terms of the transaction, Quarterhill receives $36.3M ($48M CAD) in cash, with a possible $6M ($8M CAD) earn out and $11.6M ($15.4M CAD) unsecured promissory note should WiLAN meet certain (so far undisclosed) revenue milestones.

WiLAN is also incentivized to meet those milestones with the opportunity to repurchase Quarterhill’s 10% ownership stake for an amount somewhere between $13M-$16M (CAD).

Holding that remaining 90% is Owlpoint IP Opportunities JVF LP, a joint venture between Arena Investors, LP and Owlpoint Capital Management, LLC.

On its website, Owlpoint is described as a private credit and direct lender focused on investments backed by IP “and other intangible assets” including patents, copyrights, and trademarks.

Arena Investors is a global institutional asset manager with approximately $3.5B in assets under management as of March 31. It does not appear to be related to Arena Consulting LLC, a litigation funder tied to certain patent plaintiffs, including Arendi S.A.R.L. and CogniPower, LLC.

More About Quarterhill and WiLAN

Established in 1992 as an operating company, Quarterhill is a publicly traded Canadian entity that began litigating its patents in 2007. In April 2017, Quarterhill announced a restructuring of its business model, de-emphasizing patent licensing and refocusing on the acquisition of Industrial Internet of Things (IIoT) businesses. The company’s name was changed from “Wi-LAN Inc.” to Quarterhill the following June, with WiLAN continuing its operations as a “key subsidiary of Quarterhill focusing on patent licensing”.

Roughly a handful of US district court cases filed under the WiLAN umbrella remain active, each being litigated through a controlled subsidiary: Collabo Innovations, Inc.; IPA Technologies Inc.; Polaris Innovations Limited; or Xueshan Technologies Inc. In addition, earlier this year, one of Quarterhill’s oldest litigation campaigns sprang back to life, with a dispute between Wireless Protocol Innovations, Inc. and TCL (TCT Mobile) once again becoming active (see here for RPX coverage).

According to Law360, WiLAN is still fighting a loss in its smart TV litigation against Sharp and VIZIO, in which the plaintiff was forced to pay over $4M in attorney fees “for dragging out the two patent suits in Delaware”. The company also saw an $85.2M damages verdict against Apple overturned last year.

In March, Quarterhill announced that Bret Kidd had stepped down as the company’s CEO, with Board Chair John Gilberry named interim CEO while a search for a more permanent replacement ramps up. The turnover came less than a year after industry veteran Michael Vladescu, the CEO of WiLAN, died unexpectedly in May 2022.