Redmond, Washington — Software behemoth Microsoft Corp., has agreed to pay VirnetX Holding Corp., “200 million dollars” to settle patent-infringement dispute over VPN technology in Windows, just around three weeks before a scheduled injunction hearing before a Texas judge, the companies announced Monday.
The settlement comes barely two months after a Texas jury granted 105.75 million dollars to VirnetX after finding Microsoft guilty of infringing two patents held by the Scotts Valley, California-based company.
As part of the settlement, the software colossus will license VirnetX’s patents that secure communications on next-generation mobile-phone networks. The amount is monumental for the Scotts Valley, Calif., early-stage company, which reported revenue of only $26,306 for 2009.
VirnetX describes itself as a “secure real-time communications and collaboration technology company” with a patent portfolio “obtained from a Central Intelligence Agency security project.”
Its products include software that provides a secure environment for real-time communications such as instant messaging.
VirnetX first sued Microsoft in 2007, claiming the software giant had infringed on two of its VPN (virtual private network) patents through the use of the technology in Windows XP and Vista.
A Texas jury ruled March 16 that Microsoft deliberately infringed on two VirnetX patents pertaining to the use of secure communication links between computing devices. The jury recommended to the U.S. District Court that VirnetX be awarded $105.75 million in damages.
“This successful settlement of our litigation with Microsoft will allow us to focus on the upcoming pilot system that will showcase VirnetX’s automatic Virtual Private Network technology,” VirnetX chief executive Kendall Larsen said.
Astonishingly, just a few days after the judgement was handed down, VirnetX filed another lawsuit against Microsoft, claiming that the same patent-violating technologies were also in Windows 7 and Windows Server 2008 R2.
VirnetX asserted that Microsoft had violated U.S. patents 6,502,135 and 7,188,180, which both cover specific ways to secure IP-based communications through VPNs and similar technologies.
The settlement Monday eliminates the need for that hearing.