Microsoft pays $200 million to settle patent dispute

VirnetX a software company that owns patents for Virtual Private Networking (VPN) technology sued Microsoft for infringing on its patents. Microsoft will now settle the suit for $200 million according to InformationWeek. VirnetX claimed Microsoft was infringing on two of its VPN patents for automatic and secure VPN technology. The technology covered under the patents, created by VirnetX, was part of a security project they were working on for the Central Intelligence Agency.

The original complaint was filed February 15, 2007 by VirnetX and in March of this year a court in Texas ordered Microsoft to pay $106 million. After the verdict Microsoft said, "We respect others’ intellectual property, and we believe the evidence demonstrated that we do not infringe and the patents are invalid," according to Bloomberg.

Microsoft has since changed its mind and decided to end the legal battle by settling with VirnetX, the $200 million payment will give Microsoft a license to continue to use the technology in their products. Other aspects of the settlement were not disclosed. Companies including Cisco, Google, HP, AT&T, and Verizon and many others utilize their own VPN technology that may infringe on VirnetX's patents. This settlement could have a large impact on these companies, they may go to trial like Microsoft did originally or they may decide to bite the bullet and license the technology without a fight.

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Magallanes said,

and the initial demand was for only $106 million.

Microsoft epic win! :-/

Don't think you read it right. The 106M was a settlement...the 200M includes licensing to keep using it. I wonder how much money the company was worth before the settlement. I also like to know how they come up with what is a fair price to pay?

TechieXP said,

Don't think you read it right. The 106M was a settlement...the 200M includes licensing to keep using it. I wonder how much money the company was worth before the settlement. I also like to know how they come up with what is a fair price to pay?

You didn't read it right. $106 mill. was court's fine on Microsoft which included only XP and Vista at the time. VirnetX was about to sue again for infringing it's patent on Win7 and Server 2008 too. Microsoft decided to settle out of court.

KavazovAngel said,
Hey, anyone up for making a company, register some patent then sue Microsoft?

Great idea, I'm thinking "a method of allowing a user to interact with a software system using a collection of standardized visual elements".

omnicoder said,

Great idea, I'm thinking "a method of allowing a user to interact with a software system using a collection of standardized visual elements".

Hahah

omnicoder said,

Great idea, I'm thinking "a method of allowing a user to interact with a software system using a collection of standardized visual elements".

Nah how about "users looking at images through a monitor"

KavazovAngel said,

Hey, anyone up for making a company, register some patent then sue Microsoft?

+1

Edited by Gargamel1984, May 18 2010, 8:37am :

Nightwind Hawk said,
I don't think VirnetX is worth even an eighth of that. They should've just bought them.

Heh, agreed. Was exactly my thoughts halfway through the article. I almost assumed after it said MS was ordered to pay 106$ mil, that the extra 94 mil was actually going to MS buying them out, and therefore the technology as well.

Recon415 said,

Heh, agreed. Was exactly my thoughts halfway through the article. I almost assumed after it said MS was ordered to pay 106$ mil, that the extra 94 mil was actually going to MS buying them out, and therefore the technology as well.

The extra is the penalty in using the patent in Windows 7.

Subject Delta said,
Stupid US patent laws leave another company out of pocket. US patent laws need reform... badly

The worst part is that the patents stem from a project for the CIA so it was all funded with American tax dollars.

I know that it would cost Microsoft more to fight this, but I really wish somehow would take a stand against this. Does anyone know if this is even remotely legitimate or is this a holding company?

bluarash said,
I know that it would cost Microsoft more to fight this, but I really wish somehow would take a stand against this. Does anyone know if this is even remotely legitimate or is this a holding company?

Is a company partner of the CIA, or you could say, a shady company.

Let's say that you have a company that construct the most advanced infrared detector and decide to sell your products to the CIA.. sadly you can't do that, you must sell your products to a "x" company (proxy company), this company is allowed to sell your products and IP (relabeled) to the CIA.
So, it is not strange to see that some intelligence agencies are using outdated software and hardware because they are tied to a limited list of contractors.

Mind Bender said,
I feel bad for Billy, he lost a few hours worth of making money for this dispute. *Sigh*
Too bad Gates doesn't own M$ like that anymore. It went public ages ago. Even though he owns quite a few stock shares over everyone else he isn't the soul one responsible for the company anymore unless called upon if M$ completely bottoms out I bet haha.

Morphine-X said,
Too bad Gates doesn't own M$ like that anymore. It went public ages ago. Even though he owns quite a few stock shares over everyone else he isn't the soul one responsible for the company anymore unless called upon if M$ completely bottoms out I bet haha.
Yep, just like those other companies:

Goog£e
App£e
$un
Orac£e
$u$e

My point is that saying "M$" is as ridiculous as finding the Pound sign (£) and putting it into Apple's name, or Google's, even though Apple makes more ridiculous profit margins than Microsoft and Google's not exactly hurting. These companies make money, and if they didn't, then none of us would be using this fancy HTML page.

Gates is now a full time philanthropist, and considering that Microsoft's stock didn't even go down yesterday (+0.01) and it's only down 0.01 today, I'd say they're doing okay (excluding the fact that Apple's market cap is quickly approaching theirs).

crashguy said,
I can already hear the clinking of the champagne glasses VirnetX knowing that with little work, they just made more money then their company ever would in it's existance.

Congratulations

And too all the rest of us who want to make free money, take out a patent and wait for someone else to do the work

My thoughts exactly. Too many companies, just file for a patent, then wait for some big company to start using some similar technology and sues them for infringement. IMO, if nothing was ever created, just something on paper, it shouldn't be valid. In this case, many other companies have come up with VPN software, why not go after those too?

CrashOverride said,

In this case, many other companies have come up with VPN software, why not go after those too?
Because they don't have the deep pockets that MS has.

ilev said,
Is it in addition to the $109 Mill. the court has ruled for violating the patents in XP and Vista ? Even if not, Win7 has cost microsoft another $94 Mill.

No, rather than paying the $109 million fine and getting nothing in return Microsoft settled and paid $200 million to get VirnetX off their back and get a license to use the technology.

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