Shares of Wi-LAN Inc. shot up more than 25% in trading after the technology licensing company announced it was revising its revenue guidance for the year after the settlement of a pending patent infringement lawsuit yesterday with BlackBerry maker Research In Motion Ltd. According to a brief statement issued by Wi-LAN, RIM has obtained a licence to certain patents in wireless technology and the litigation between the two companies will be dismissed.

The specific terms of the agreement were not disclosed although Dundee Capital Markets analyst Arinder Mahal said the settlement will likely yield upward of $5-million in the 2009 fiscal year in recurring revenues and covers patents related to CDMA and Wi-Fi technology. As a result of the new licensing fees coming from RIM, Wi-LAN said its expects its annual revenue to be between $24.5-million and $25.5-million, up from previous guidance of $15-million to $20-million. Its earnings are expected to be within the range of $8-million to $9.5-million, up from previous guidance of $2-million to $5-million.

Wi-LAN’s fortunes will now go beyond the immediate monetary gains it will receive from RIM, Mr. Mahal added.

“The bigger impact here is on the strategic side,” said Mr. Mahal, who raised his target price for the stock to $3.25 while maintaining a “buy” rating. “RIM is a premium brand in the smartphone market, and having them sign on the dotted line sends a strong signal to the handset community … by increasing the confidence of its content portfolio.”

RIM did not release a statement on its settlement with Wi-LAN after a company spokesperson said in an e-mail they do not comment on litigation.