Tyler Burns - Director of Investor Relations James Douglas Skippen - Chief Executive Officer, President, Chief Legal Officer and Executive Director Michael Shaun McEwan - Chief Financial Officer

Daniel Kim - Paradigm Capital, Inc., Research Division Robin Manson-Hing - CIBC World Markets Inc., Research Division Eyal Ofir - Clarus Securities Inc., Research Division Kevin Wright - Canaccord Genuity, Research Division Ralph Garcea - Global Maxfin Capital Inc., Research Division

Thank you, operator, and good morning, everyone. Earlier this morning, WiLAN issued a news release announcing its financial results for the third quarter ended September 30, 2014.

This news release is available on WiLAN's website and will be filed on SEDAR and EDGAR. In this morning's call, we have Jim Skippen, WiLAN's President and Chief Executive Officer; Shaun McEwan, WiLAN's Chief Financial Officer; and Michael Vladescu, WiLAN's Chief Operating Officer.

Following prepared remarks by Mr. Skippen and Mr.

McEwan, analysts will have the opportunity to ask questions. Certain matters discussed in today's conference call or answers that may be given to questions could constitute forward-looking statements.

Actual results could differ materially from those anticipated. Risk factors that could affect our results are detailed on the company's annual information form and other public filings that are made available on SEDAR and EDGAR.

During this conference call, we will refer to adjusted earnings. Adjusted earnings do not have any standardized meaning prescribed by U.S.

GAAP. Adjusted earnings are defined in our quarterly and annual filings that are made available on SEDAR and EDGAR.

Now I would like to turn the call over to Jim Skippen. Jim, please go ahead.

Thanks, Tyler, and good morning to everyone. I will first speak to highlights of the quarter.

This quarter, WiLAN generated revenues of $24.6 million, exceeding our guidance by $4.9 million or 25%. WiLAN generated adjusted earnings of $13.2 million, exceeding the top end of our guidance by $3 million or nearly 30%.

WiLAN generated $10.7 million in cash from operations. We returned $4.5 million to shareholders in dividend payments.

We note that the trailing 12 months revenues encompassing the fourth quarter of 2013 through the third quarter of this year exceeded $105 million and trailing 12 months adjusted earnings exceeded $63 million. Finally, the Board of Directors has declared a quarterly dividend of CAD 0.05 per share for the third quarter of 2014.

This dividend will be paid on January 7, 2015 to shareholders of record on December 12, 2014. I wanted to say a few words initially concerning Apple.

On October 1, we received notice that Apple have been granted summary judgment of noninfringement on 2 of our wireless patents in one of our California litigations. Firstly, both we and our legal advisers believe this summary judgment decision is incorrect and we will continue to fight this decision.

Moreover, if necessary, we may appeal the decision. At the moment, we are in active litigation on 8 patents with Apple.

So an adverse decision on 2 of our patents is not at all dispositive of the issue. Investors may be interested in knowing that until recently, we were in litigation on 9 patents with Apple, but the RPX patent rights agreement recently signed resolved the issue in 1 of the 9 patents.

There is no question that Apple has a sympathetic audience with some U.S. juries.

However, we firmly believe that Apple infringes many of our patents. And assuming courts are fair with us, eventually if Apple does not take a license, we believe Apple will be found by a court to infringe 1 or more of our patents.

The conclusion on this point and despite this setback, we continue to meet with success in many areas and many strategies seem to be working. I can commit that we will continue to fight Apple until it takes a license at a fair rate to the Intellectual Property it infringes.

However, it is certainly management's view that the long-term value of the company is not materially impacted one way or another by the presence or absence of any one licensee, including Apple. Next, I would like to talk about our licensing activities.

This quarter, we signed a total of 16 licenses or renewal licenses. Licenses signed in the quarter break down as follows.

5 companies were granted rights for a portfolio of data networking patents. We also signed our first patent rights agreement for this portfolio with RPX Corporation, a leading provider of patent risk solutions.

7 companies signed broad license renewals for wireless technologies. Like earlier renewals with Cisco, Samsung and Nokia Networks, these agreements reinforce the value of wireless technologies that we have added to the portfolio.

We signed a license agreement with 2 wireless carriers for network management-related technologies, which were acquired from Siemens. We also signed our first license for a portfolio related to device security.

Finally, we entered into our first medical license relating to stent technology with Stryker, one of the world's leading medical device companies. During the quarter, we added 4 new patent portfolios, including a portfolio relating to smart meter technology.

We also signed a partnership in the medical space, adding a portfolio of patents related to orthopedic technology. This portfolio comes from the world-renowned hospital for special surgery located in New York City.

A key strategy for WiLAN is to drive our growth through the diversification of our business. We are focusing on increasing both the number of portfolios that we offer for license and expanding into new markets.

We will continue to focus effort on attracting portfolios from companies who are willing to share in the success and risk of a licensing program. Over the past 12 months, we have added 19 new portfolios, covering a variety of new markets including the automotive, energy, medical and semiconductor markets.

These new portfolios give WiLAN a total of 39 distinct portfolios under management and should drive significant new revenues in the coming months and years. In conclusion, I would reiterate that our 2 key strategies of diversifying into new markets and controlling risks and costs seem to be working well.

Our trailing 12-month results of over $105 million in revenues and over $63 million in adjusted earnings speaks to our business continuing to strengthen. For these reasons, we continue to be optimistic about our prospects in the final quarter of this year and beyond.

With that, I will now turn things over to Shaun to discuss our financial results in more detail. Shaun?

Thank you, Jim, and good morning, everyone. Revenues for the third quarter ended September 30, 2014, were $24.6 million, which exceeded our guidance of $19.7 million by $4.9 million.

For our third quarter of 2014, 2 licensees individually accounted for 13% and 11% of revenues, respectively, whereas in the comparable period last year, 3 licensees individually accounted for 30%, 15% and 10%, respectively. In the third quarter of 2014 and 2013, the top 10 licensees accounted for 71% and 86% of revenue, respectively.

I wanted to take a quick moment to remind investors of a point that I made on our last call, that is as the number of licensing programs in our business increases, and Jim has already outlined they were up to 39 distinct programs, and in particular, the number of licensing programs based on partnerships increases, then we would expect that a greater share of our revenue generated in a given quarter will come from one-time payments. It is important to note that during this quarter, which is the third quarter of 2014, we generated approximately 12% of our revenues from our partner programs.

Now turning our attention to operating expenses briefly. The cost of revenue expenses for the third quarter of fiscal 2014 totaled $17,639,000 or approximately 72% of revenue.

Compensation costs, patent management costs and external litigation expenses, all cash costs in this category, were $1.8 million, $1.7 million and $3.1 million, respectively. Cost of revenue expenses in the quarter also included $9.2 million in non-cash expenses, which are principally amortization of patents.

Our total cost of revenue expenses have declined significantly year-over-year due in large part to lower litigation and compensation expenses. Comparatively, in the third quarter last year, cost of revenue expenses totaled $25.7 million and included compensation costs of $1.6 million, patent management expenses of $1.5 million and litigation expenses of $14.2 million, along with non-cash operating expenses totaling $7.8 million.

Cost of revenue expenses during the third quarter of fiscal 2014 also included contingent partner payments and legal fees of just over $1.6 million. The contingent partner payments and legal fees relate directly to the revenue that our partner programs generated during the quarter.

In the third quarter, litigation expenses at $3.1 million were within the guidance and were down significantly from the third quarter of 2013. This decrease in comparison to the same period last year is largely attributable to a decrease in the level of litigation activities and new shared risk fee arrangements entered into with our external counsel.

This is the fourth straight quarter in which our litigation expenses have been vastly lower than the levels experienced in the prior-year period. Consider also that for the 9 months ended September 30, 2014, litigation expenses totaled $6.4 million.

In comparison, litigation expenses in the 9 months ended September 30, 2013, totaled over $40 million. Our new shared risk model that we've adopted for our litigation activities is having sustained positive impact on the financial performance of our business.

Litigation expenses are expected to vary from period to period due to the variability of litigation activities and any contingent payment that may be required as a result of licenses signed in any particular quarter. Our marketing, general and administration expenses in the third quarter of 2014 totaled $2.7 million, or approximately 11% of revenue, and included $2.4 million in overhead expenses, which are cash-oriented and $332,000 in non-cash charges for depreciation and stock-based compensation.

Comparatively, in the same period last year, MG&A expense totaled $3.1 million, which was comprised of $2.6 million in cash-oriented overhead expenses and non-cash charges of $591,000. In the third quarter, the company incurred a foreign exchange loss of $1.1 million, which included a non-cash, unrealized foreign exchange loss of approximately $900,000.

The unrealized foreign exchange loss recognized in this quarter results from the translation of monetary accounts, principally cash denominated in Canadian dollars to U.S. dollars at quarter end as well as the reevaluation of foreign exchange contracts then held.

At September 30, we held foreign exchange forward contracts totaling approximately $20 million, which mature at various dates through to June 2015. We recorded a net income tax expense of approximately $3.1 million in the third quarter as compared to an income tax recovery of $1.3 million the previous year.

The current quarter's income tax expense is comprised of approximately $928,000 of current tax expense, which arises from foreign taxes withheld, and approximately $2.2 million in deferred income tax expense, which is a non-cash item. The deferred tax expense, which is significant when compared to our pretax earnings, arises from 2 main points.

First, we are highly profitable in our Canadian parent corporation and therefore, we are utilizing up our previously recognized deferred tax assets, hence the expense. And second, as we make investments in the business, including hiring team members, developing partner relationships and obtaining additional portfolios, we are generally doing that in new operating subsidiaries, both in Canada and the United States.

Therefore, any investments we make, which will be reflected as losses for income tax purposes, accumulate for use in future periods. However, at this time, we are unable to recognize the value of those assets.

If we were able to recognize them, they would offset the utilization of the Canadian asset and lower the deferred tax provision. At quarter end, we maintained tax pools of approximately $120 million, with approximately $16 million of that located in the United States.

We have a valuation allowance against all of the U.S. assets and certain of our Canadian assets, which was $14.6 million at quarter end.

As a result of all of the above, WiLAN GAAP net earnings for the third quarter amounted to a loss of $375,000 or $0.00 per share on both a basic and fully diluted level compared to a loss of $6,459,000 or $0.05 per share on both a basic and fully diluted level last year. In the 9-month period ended September 30, 2014, GAAP earnings totaled $9.2 million or $0.08 per share, basic and fully diluted.

This compares favorably to a GAAP loss of over $20 million in the 9 months ended September 30, 2013. We believe that adjusted earnings, a non-GAAP measure, assists in evaluating the performance of our business by eliminating non-cash and certain other nonoperating expenses.

For the third quarter ended September 30, 2014, adjusted earnings were $13.2 million or $0.11 per share on a basic level. This compares favorably, in fact, very favorably to a loss of $263,000 or $0.00 per share on a basic level last year.

More importantly, in the 9 months ended September 30, adjusted earnings totaled approximately $47 million. In comparison, adjusted earnings for the same period last year totaled $276,000.

Quickly turning our attention to the balance sheet for a moment. We ended the third quarter with $126.1 million in cash, cash equivalents and short-term investments.

This represents a decrease of $5.7 million from the cash position at December 31, 2013. During this quarter, we generated $10.7 million from operations.

And with that, we returned $4.5 million to shareholders through dividend payments, used $297,000 on the repurchase of common shares under our normal course issuer bid, and further, we used approximately $19.2 million to pay for patents that we previously acquired. In the 9 months ended September 30, 2014, we have generated $44.6 million from operations.

And out of that, we have returned $13.4 million to shareholders through dividend payments. Lastly, I will discuss our guidance for the fourth quarter of 2014 ending December 31.

For the fourth quarter, we expect revenues to be at least $20.6 million. Operating expenses for the fourth quarter of 2014 are expected to be in the range of $11.5 million to $12.7 million, of which $4 million to $5 million is expected to be litigation expense.

For the fourth quarter of 2014, and assuming no additional agreements are signed, adjusted earnings are expected to be in the range of $8.3 million to $9.2 million. Due to their nature, certain income and expense items, such as significant license agreements with companies, brokerage opportunities, new litigation activities, contingent payments to licensing partners and litigation counsel that may be required from signing other certain licenses, losses on asset impairments or foreign exchange losses, cannot be accurately forecast.

Accordingly, those are excluded from our guidance just noted above. Actual revenues reported may exceed the revenue guidance provided due to the receipt of royalty reports, signing of new license agreements and the completion of licensee audits, all after which items is provided.

Our actual expenses may exceed the expense guidance provided due in part to contingent payments to licensing partners and litigation counsels that may be required from certain licenses signed during the balance of this quarter. This concludes my review of the financial results for the third quarter ended September 30, 2014, and I will now turn the call over to Tyler.

Thank you very, Shaun. We now move to the Q&A portion of the conference call.

Operator, may we have the first question, please?

Wondering if I can just reference an earlier comment, I think you suggested 12% of your revenues came from your partner program in the quarter. That would imply roughly $2.9 million in revenues.

And then when I look at the cost breakdown, there is the contingent partner payments of $1.6 million, so that roughly equals 55% in terms of cost versus the revenues. Is that the way we should look at the partner program split on a go-forward basis?

Yes. I think we have been pretty open with our general program being roughly 1/3 to litigation counsel and then roughly a 50-50 split between us and the previous owners in that kind of program.

Certainly, not all of them are exactly that way, but generally, that's the current information we have and that produces those kinds of results in the quarter.

Okay. And with regard to that number, are -- can you give us a sense of how much of that was one time versus more of a recurring type payment?

The majority of that would be of a one-time environment.

Okay. And secondly, just on the litigation, with regards to the way you've changed the structure of your shared risk with your counsel.

When we look forward into 2015 and you start to ramp up activity with Apple, can you give us a sense of the magnitude of the impact? I mean, history is, I mean, there's a big spread between litigation.

I'm glad you asked that because strangely, if there is more -- as activity ramps, the decreases may actually -- the expenses may actually decrease or be flat. And the reason for that is that our deal with counsel is that we pay a fixed amount per month or per quarter.

And we keep paying that until we hit a cap, and once we hit the cap, we stop paying until there's a license or a settlement. So in a number of cases, we're going to hit the cap and we stop paying, despite the fact that actually that may be the exact time when there is even more litigation activity because we're in a trial or something of that nature.

And that's what we anticipate is going to happen. So hopefully, that answers it.

Maybe you have a follow-up, I won't keep talking until -- assuming that answers your question.

Absolutely, that's very helpful. So that begs the next question with regards to guidance for the fourth quarter, $4 million to $5 million litigation.

Should that be the assumed run rate until we hit that cap?

I hope it's the high end of the run rate. I think it could -- it shouldn't go up from there, it possibly could decrease some.

But for me, I sort of think the run rate of $3 million to $4 million is kind of what I think would be appropriate for us. And so I'm going to be watching it carefully if it seems to be creeping much higher.

Right, okay. And could you share with us when you think you might hit that cap?

I prefer not to do that because there may be other litigations, and I don't have the contracts in front of me so I'd have to look at it. There are different caps for different litigations.

So we have this type of deal in place with counsel for a number of cases, and I'd have to look at it. But I do know that in some cases, we're getting closer to where we're going to hit the cap.

Okay, okay. So last question then.

Would Q4 activity, with this potential appeal with Apple, be accounting for what might be a one-time blip in litigation in Q4 and then presumably it will hit the $3 million to $4 million mark in litigation on a quarterly basis going to '15? Would that be a fair assessment in terms of what typical range you'd be looking at?

I think it's reasonably fair, although we may be sort of at a high point for the next few quarters. And then hopefully, we'll see somewhat of a drop.

So I'm not positive yet. I mean, we're still working on our plans for next year and beyond, exactly what Q1 and Q2 are going to look like, but I'd be surprised if it's much more, maybe a little bit less or the same.

Okay, great. Sorry, one last question.

You have done a tremendous job adding to the patent portfolio to have a broader array in front of you, spent a fair amount in the quarter, wondering what type of potential opportunities you continue to see and what more you need to do to bolster the current product portfolio?

Well, I think we're going to do more of the same. I mean, I think the thing that I'm very pleased about is that -- how rapidly we've started signing licenses, which in the aggregate are becoming quite significant on totally new portfolios.

And if you recall, Daniel, you've been looking at the company for a long time, we -- I've always told people, look, you should really give it 2 years before you can expect to see money. It may take much longer, but if you get it in a quicker time frame, you're really beating the odds.

Well, most of that $3 million came within a few months or within 6 months of launching programs. So we really beat the odds on that, and we think that's just scratching the surface, just beginning.

There's also just a couple of the portfolios, but we are starting to add many, many other portfolios in new areas. There's lots of licensing activity going on.

We're hopeful that this trend continues and we're going to see more and more signings in more and more areas. We're also been very active on continuing to attract portfolios.

So by no means are we done. We've got a long queue of opportunities that we're looking at and people that are interested in partnering with us and really just going through our due diligence and going through the process of vetting the portfolio.

And most -- the vast majority of these are full shares, so we don't put any money upfront or very little money upfront, so from a capital point of view, they are very, very efficient for us on allocation of capital.

Just a little bit more on the purchase of patents. This quarter, it's a little high.

What -- I know you mentioned, I think, it was 4 patent families you purchased this quarter. Is the majority of that these new patent portfolios you purchased or are they, majority of it, or a large portion from previous deals where you had to acquire licenses after having signed license?

Yes. The vast majority of that cash use in the period for purchase of patents is related to the retirement of the deferred financing charge, which arose in previous quarters and previous years, in fact, from acquisitions that we have done.

It is not related to the 4 or 5 partnerships that Jim talked about. In fact, the 4 or 5 partnerships that Jim talked about in aggregate are sub a few hundred thousand dollars in total acquisition costs.

Okay. And so -- okay, so that's good.

So then moving forward, can -- how can we think of the purchase of patents? Is this kind of a outside of paying -- outside of purchasing patents from previous licenses, is this number going to be relatively small, like under a million?

It all depends -- it depends on the opportunity. I think that if the opportunity is big enough and we see a strong business case for it and requires that we put more money upfront, we're prepared to consider that.

But generally, we're more focused -- or I'm a lot more interested in pure shares or very little money upfront. So the barrier to overcome for the management is trying to convince me to approve a much larger outlay of cash that's higher than it used to be.

So I think years ago, I used to talk about our sweet spot being the $5 million to $10 million acquisition. Today, I would say that to get $5 million to $10 million allocated towards a portfolio would be very unusual for us unless it was an extremely compelling portfolio.

Okay. In terms of V-Chip, are there any big -- I know there's, I guess, LG, well, who knows what's going to happen with that, and Samsung.

Are there any other large players out there that you're going after?

Not currently. We're not.

I mean, the V-Chip program, we continue to be paid by all V-Chip licensees, more or less. And so from that point of view, it's very intact.

We're including the V-chip and parties are very interested when they take comprehensive TV licenses. So for instance, a license with Panasonic that we signed, a license with Sony that we signed, V-Chip is very important to them.

As you mentioned, LG is still unlicensed, but given the ruling, the unfortunate ruling that came out some time ago, we are continuing to evaluate that. We were hopeful that the ratings system changes soon because we think that there's no question that a point of change to the rating system to RTT-05 that all LG televisions will continue to infringe and we continue to talk with other licensees.

I think the game changed a little bit for us when we acquired a very large Korean portfolio of TV patents. And now we have a number of patents.

And then actually there are patents from the Infineon acquisition we made and patents from the Conexant acquisition that we made that are in that portfolio that are also relevant to TV licensing. So the complexion of the licensing program has changed because now, we're licensing a portfolio of TV patents, not just 1 patent.

And the other thing that I think is important for investors to understand is that all V-Chip licensees continue to pay us, and that program, from that point of view continues as before.

Okay. And I guess, obviously, I mean, these new TV patents are going to be used for resigning a lot of the other guys that are going to be coming up due in 2016 I think it is?

Yes, that's right. In late 2016, you're right.

Licenses will expire because that's when the V-chip agreement expires. And you're right, all these patents will be used in an effort to resign these licenses.

Okay. And buyback, is that -- I mean, with your share price where it is, are you expecting to be a little more active there?

Or what's the plan?

Well, I think we are prepared to be more active and particularly if we see more weakness in the stock, we'll get much more aggressive, but -- and we are continuing to make periodic purchases, but it's at a relatively low level. So I think we will react if we see more weakness in the stock, but I'm not positive we're going to be extremely aggressive at these levels.

Not because we don't think it's a great value, but because I think we, when we look at the opportunities to deploy our capital into other things, they look very, very promising, too, and we're reluctant to give up on that. But we're continuing to look at it and continuing to evaluate it.

Just a quick question. Do you guys have any updates on the Apple case in Texas?

I mean, you guys are going through the appeal process, so I'm assuming...

Yes -- sorry about that. So as you know, the judge overturned the jury and found that the patent was, in fact, valid and there was no reasonable basis for the jury to find that it was invalid.

Apple is appealing that. At the same time, we're appealing the finding of non-infringement on the 802 patent, which was developed by one of the founders of WiLAN, which most of the industry or a vast majority of the industry is licensed.

We filed our brief in September. I believe Apple has to file its reply in December, and we get to reply to that in January.

And then within, I would assume, 2 to 3 months, there'll be an oral hearing. And within a month of that time, I would expect a ruling on that.

Okay. So potentially the appeal goes to a quid [ph] trial, I guess, in call it mid-2015 or so?

Yes. That's right, or earlier, could be the spring of 2015, we're back in trial.

Okay, okay. That's good.

Just on some of the other pipelines. Obviously, you guys have added some more partnerships through the quarter and you're signing new licenses.

But what else is in your pipeline in terms of potential partnerships? Are there any larger patent pools available out there?

And then what are you seeing from a competitive landscape as you're bidding for these, with all the RPXs and all the other InterDigitals and all the other companies that are aggregating these patent portfolios?

Well, we have a very robust pipeline. We're looking at some extremely large potential acquisitions or partnerships, and there are some small ones.

And we're, as long as the patents are of very high quality and the market is significant enough, willing to look at small and large and everything in between in terms of the number of patents. And it's robust.

You're going to continue to see a number of announcements, I would predict, about acquisitions, and hopefully soon, licenses from them. In terms of the competition, the 2 parties you mentioned, I'm not saying -- they're definitely both parties that we've seen in the market.

But InterDigital, my own take is a lot of their focus is on developing their own technology and they may not be quite as active in making acquisitions, so we don't see them as much as some other people. RPX typically is looking to buy patents or acquire patents -- and this is my understanding, so it's best to talk to them to get it exactly, but my understanding is that they're typically acquiring patents that are already in litigation that affect a number of their clients or future clients.

So that's the kind of acquisitions they are making. That's not typically what we make.

We are typically focused on companies that have valuable patents, that they are not doing very much with, that we can basically offer a turnkey solution where we'll take them on and they don't have to put any money into it, we'll finance everything, and they just essentially sit back and wait for the dividend checks to arrive. And the companies that we probably see more frequently will be companies like Acacia, that would be competing for those types of opportunities.

But what sort of bolsters me a lot of time when I think about this is there are thousands of companies that are sitting with valuable patents and portfolios that could be licensed if someone just had the expertise and the ability to do it. There are only a very small handful of companies like WiLAN that have the capital and the expertise to do this, maybe less than 5, because it is a capital-intensive business and it takes a lot of expertise.

And for those reasons, I think we're very well positioned vis-a-vis other companies. Certainly, we won't win everything, but vis-a-vis many, we will win.

And we have them. So I think it's robust.

You're going to see more announcements coming down the pipe.

Okay. And then just are you guys comfortable with the headcount in terms of being able to support all of these partnerships as they come down?

Well, that's a good question. We're up a bit on headcount, we're up to 67 people.

We've adopted an approach now which I think is working very well, where we basically have smaller teams. And the small teams are responsible both for acquiring their portfolios and licensing them.

And it allows corporate management to sort of feed the strong teams and maybe deal with the weaker teams because they're very exposed in terms of -- hopefully, they're all strong teams so -- in that we don't have to deal with anything. So in a way, we do think that we may be able to continue to scale our business by adding new teams on that model.

And as long as every team is profitable and covering their costs, it may make sense to add more headcount. So we will continue to review that, but I don't see any dramatic increase in headcount, but there may be a bit of an incremental increase in headcount as revenues continue to rise and opportunities continue to rise.

A couple of quick questions. First one, the last dividend increase you guys did in the second quarter of this year.

Is that sort of the time frame that we should think about on dividend increases? And can you give us any sort of sense on payout ratios on free cash?

Well, I'll take the latter part first because I can tell -- we do have a set sort of policy on that. But generally, we are looking to allocate 40% of our free cash to dividends.

That's the general sort of philosophy we bring to the table on it. Now the first question, I think the company is -- would like to do frequent dividend increases or at least periodic dividend increases, maybe once annually.

We've just been included in the Dividend Aristocrats index, so we're happy about that. And that's in part because we have been frequently increasing our dividends.

My expectation, and this is of course a board decision, that is that the board will look at it in the first or second quarter of 2015, and if the board attempts to make a dividend increase, that's when it would probably do it.

Okay, that's great. Just wanted to make there wasn't any change on the policies there.

Other questions, a little bit more high-level on the industry with the nomination of Michelle Lee, ex-Google lawyer, in the Patent Office, what's your view on that? Do you guys see that as generally good?

I know a lot of tech companies are pushing for her nomination. So if you can give me any color on that, then I'll pass the line.

Well, I believe she has been acting in that capacity for a while now, so I don't know that it will mean a dramatic change. So far, at least in our dealings with the Patent Office, we've been fairly successful.

We've got a lot of prosecution underway, and we think it's moving along okay. The challenges for patents that have gone to the Patent Office, we've been successful in every one of them, the V-Chip patent, the 759 WiMAX patent and recently, the 802 patent, which is at issue with Apple.

The Patent Office came back and in every case said, "No, these patents are valid and fine." So our interaction so far had been good, I mean, I -- so I can't offer too much than that.

I don't know her personally, but I assume she's a competent person that's going to do a good job in that role.

2 quick questions. 1 on the V-Chip side, and I think it pertains to your other portfolios, but what happens if there's a change in ownership?

So Panasonic selling its Sanyo North American TV business to Funai. I mean, if Funai's a licensee, I'm not sure if they are, does that transfer over or what happens in change of ownership situations?

Well, it's -- these -- both of those -- those agreements are running royalty-type agreements, so they're based on units sold, more or less. So it shouldn't really impact us.

So as far as I'm concerned, it won't have an impact, but it's possible that there's something we're missing here, but we don't see any impact.

And is that the same on the 802 and some of the wireless patents if there's change of ownerships and consolidation across some of your licensees already?

Well, the vast -- we have almost 300 agreements. And they're all a little bit different.

And there are very small number where there are some issues potentially on change of control but the vast majority, there are not.

Okay. And then just on the ones that you've signed quickly from the new portfolios, I mean, were those licensees already in litigation or once they saw you take over those portfolios, they got more concerned that they would proceed to litigation and decide to settle.

How have you been able to close some of these within the last 6 months, which is a great sign, just curious?

Yes, so the -- basically, the data networking for nonstandard parts but basically, it would cover things like point-of-sale terminals and a whole bunch of other things. Those licenses pretty much all came as a result of settling litigations.

And I believe now, we've settled all the litigations on that portfolio. Shaun is telling me there's 1 or 2 still left, but the vast majority have been settled.

The Stryker license on the stent technology, there was no litigation. We knew that Stryker was aware of this portfolio, we talked to them, and were able to quickly conclude a license.

Another one that we signed on data security, there was litigation that has been commenced. So yes, a lot of these -- really, the majority of them, I guess, are driven by litigation settlements.

And when you're looking at these portfolios, I mean, do you have a hurdle rate on returns? I mean, do you want a 20% ROE or -- and a certain time frame that you think you can close these deals?

Yes. We definitely do.

We have plans and -- I mean, Shaun, maybe you could comment on that.

I was going to say, for acquisitions, like if we're putting our cash outright -- for an outright ownership of a portfolio, we tend to do our discounted cash flow models using a 25% to 26% discount rate to compensate for our weighted average cost capital plus a risk premium for the business model. But using that in DCF kind of philosophy, when you're doing a partnership model that has no upfront cost, is kind of wrong, right, because your upfront capital is 0 or virtually 0.

So in most circumstances, the rate of return is really more like an IRR over the program. And we look -- we use -- internally, we use our modeling on a 12 to 18 month window in terms of first revenues.

So when we get stuff in 4, in 6 months, that's a dramatic improvement over our expectation. But when you do the modeling on a 12 to 18 month start and discount those cash flows back, you're talking about significant, significant rates of returns.

So I think on the partner model, it's more an opportunity cost issue as opposed to an outright rate of return issue that you need to think about, i.e. how many portfolios can we get to and how many teams can we have, as Jim has outlined, more so than the rate of return on the portfolio because it really doesn't lend itself to that kind of thinking.

Thank you for attending WiLAN's Third Quarter 2014 Financial Results Conference Call. A replay of this call will be available until 11:59 p.m.

on January 29, 2015. Instructions for accessing the replay of this conference call can be found on the news release that was issued earlier today and on the WiLAN website.

Thank you and goodbye.