Microsoft Faces Second VirnetX Patent Lawsuit

Microsoft finds itself on the receiving end of a second lawsuit by small IT company VirnetX, after being hit with a $105.7 million judgment in the first suit. VirnetX is alleging that Windows 7 and Windows Server 2008 R2 infringe on its patents. Microsoft's recent legal troubles in East Texas include a patent-infringement suit by Toronto-based i4i, which won a substantial judgment against Microsoft in 2009.

Microsoft found itself subjected to yet another lawsuit by VirnetX on March 17, a day after losing a $105.7 million judgment to the smaller IT company in an East Texas court.

The second lawsuit alleges that Windows 7 and Windows Server 2008 R2 infringe on the same two VirnetX patents at issue in the first suit.

"This is a tactical and procedural post-trial action to ensure and protect our property rights as we proceed to final resolution with Microsoft," Kendall Larsen, VirnetX president and CEO, wrote in a March 18 statement.

On March 16, a Texas jury found 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 business model involves building secure real-time communication links using secure domain names and technology that can be integrated into network infrastructure, operating systems and processor chips.

That case is VirnetX Inc. versus Microsoft Corp., 07cv80, U.S. District Court, Eastern District of Texas (Tyler), and was presided over by U.S. District Judge Leonard Davis.

"We are disappointed by the jury's verdict," Kevin Kutz, Microsoft's director of public affairs, wrote in a statement to eWEEK on 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."

The cases mark yet another round of legal troubles for Microsoft in East Texas courts. In August 2009, the same judge ruled that Microsoft had violated an XML-related patent held by small Toronto-based company i4i, and ordered Microsoft to pay a hefty multimillion-dollar fine on top of yanking Word 2003 and Word 2007 from sales channels within 60 days.

There followed months of complicated legal maneuvering, with the U.S. Court of Appeals for the Federal Circuit deciding to uphold the i4i verdict on Dec. 22 and Microsoft subsequently asking for a review of the decision by all 11 judges on the U.S. Court of Appeals for the Federal Circuit. In the interim, Microsoft also issued a patch that seemed to allow Word to sidestep the alleged infringement.

As in that case, the presence of dual lawsuits could mean that the legal action surrounding VirnetX will drag on for some time.