Microsoft Settles Patent Infringement Case with VirnetX

Microsoft announced that it would pay $200 million to settle a patent-infringement suit leveled against it by VirnetX, which builds communication and collaboration technologies, including a method for establishing secure communication links between computers on a virtual network. In March, a Texas jury had found that Microsoft infringed on two U.S. patents held by VirnetX, and ordered the software giant to pay $105.7 million in a substantial legal judgment. East Texas has been the site of much legal trouble for Microsoft as of late, with the company also facing a patent-infringement suit leveled against it by Canadian startup i4i.

Microsoft will pay $200 million to settle an intellectual-property suit with VirnetX Holding, which alleged that the software giant infringed on its patents related to communications, virtualization and collaboration technology. That monetary amount represents a substantial markup from the $105.7 million legal judgment previously leveled against Microsoft in the case.

While many terms of the agreement remain undisclosed, Microsoft will apparently license VirnetX technology for its own products.

On March 16, a Texas jury had found that Microsoft 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." As a company, VirnetX designs methods for building 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 v. Microsoft Corp, 07cv80, U.S. District Court, Eastern District of Texas (Tyler).

That same Texas legal venue has caused no end of trouble for Microsoft lately, being the host of another patent-infringement lawsuit leveled against the company by Toronto-based i4i.

With regard to the i4i case, Microsoft faced another setback May 11, when the U.S. Patent and Trademark Office confirmed the validity of the startup's patents. The convolutions of that particular case extend back to August 2009, when a federal judge ordered Microsoft to pull copies of Microsoft Word 2003 and 2007, which allegedly violate the i4i patent's custom X M L-related properties, from store shelves. Microsoft immediately filed an appeal, but the Court of Appeals for the Federal Circuit decided to uphold the verdict in December. Microsoft responded by asking for a review of the decision by all 11 judges on the U.S. Court of Appeals for the Federal Circuit, and by issuing a patch that would supposedly sidestep the alleged infringement.

On April 1, the court denied that multiple-judge review. "We are disappointed," Kevin Kutz, Microsoft's director of public affairs, wrote in a May 11 statement, "but there still remain important matters of patent law at stake, and we are considering our options to get them addressed, including a petition to the Supreme Court."

As with the VirnetX case, Microsoft faces substantial monetary fines if the courts uphold all judgments.

East Texas courts have a reputation as a good place for smaller IT companies to pursue intellectual property suits against larger corporations. While many of these cases seem to be settled out of court-or dismissed as totally frivolous-recent lawsuits such as those leveled by i4i and VirnetX are notable for at least extending to the Big Judgment phase.