Microsoft Will Appeal VirnetX Ruling, $105.7M Judgment

 
 
By Nicholas Kolakowski  |  Posted 2010-03-17
 
 
 

Microsoft will appeal a $105.7 million legal judgment in a patent-infringement case involving VirnetX Holding, a small communications and collaboration technology company.

A Texas jury found March 16 that Microsoft had infringed on two U.S. patents held by VirnetX: No. 6,502,135 B1, titled, "Agile Network Protocol for Secure Communications with Assured System Availability," and No. 7,188,180 B2, "Method for Establishing Secure Communication Link Between Computers of Virtual Private Network." VirnetX's stated aim is to design ways to build secure real-time communication links using secure domain names and technology that can be integrated into network infrastructure, operating systems or even processor chips.

The case is VirnetX inc. versus Microsoft Corp., 07cv80, U.S. District Court, Eastern District of Texas (Tyler). It was presided over by U.S. District Judge Leonard Davis, in the same legal venue where Microsoft came to grief in a 2009 patent-infringement suit leveled against it by small Toronto-based IT company i4i.

"We are extremely pleased with the jury's decision," VirnetX President and CEO Kendall Larsen wrote in a March 16 statement. "Receiving a nine-figure award is tremendous and verifies our belief that our patents are foundational and important. We look forward to the appeals process as further validation of our patents."

Microsoft announced plans to appeal.

"We are disappointed by the jury's verdict," Kevin Kutz, Microsoft's director of public affairs, wrote in a statement to eWEEK March 17. "We respect others' intellectual property, and we believe the evidence demonstrated that we do not infringe and the patents are invalid. We believe the award of damages is legally and factually unsupported, so we will ask the court to overturn the verdict."

Microsoft has encountered patent-related difficulties in East Texas courts, which have a reputation as a good place for smaller IT companies to pursue intellectual property suits against larger corporations. In August 2009, the U.S. District Court in East Texas ruled that Microsoft had violated an XML-related patent held by i4i and ordered that Microsoft Word 2003 and Word 2007-both of which it ruled contained patent-violating code-be pulled from store shelves and other sales channels within 60 days.

That original verdict segued into months of complicated legal maneuvering. On Dec. 22, the U.S. Court of Appeals for the Federal Circuit decided to uphold the i4i verdict, which would have seen the copies of Word yanked from distribution by Jan. 11. Less than a day after, Microsoft issued a patch that seemed to allow Word to sidestep the alleged infringement, even as it asked for a review of the decision by all 11 judges on the U.S. Court of Appeals for the Federal Circuit.

Many patent-infringement lawsuits by small companies against massive ones tend to be settled out of court or else are quickly ejected from the system. With a $105.7 million judgment involved, though, the VirnetX case may continue for some time to come.

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