--Jury finds Cisco didn't infringe patent
--Cisco praises verdict
--VirtnetX shares drop
(Adds statement from Cisco.)
By Drew FitzGerald
A federal jury in Texas sided Thursday with Cisco Systems Inc.
(CSCO) in a patent-infringement case brought by VirnetX Holding
Corp. (VHC), sending shares of the patent-holding company down
28%.
The verdict from a jury in the U.S. court for Texas' Eastern
District dealt a serious blow to VirnetX, a Zephyr Cove, Nev.,
company that uses its patent portfolio to seek revenue from
licensing fees or court judgments. Most of VirnetX's revenue has
come from a $200 million settlement reached with Microsoft Corp.
(MSFT) in 2010, according to research firm ISI Group.
VirnetX shares closed down 28% to $25.75 Thursday, erasing more
than $500 million of market value. They fell another 5.9% to $24.22
in after-hours trading. A spokesman for the company didn't
immediately respond to a call for comment.
Cisco's general counsel said the company was grateful the jury
agreed "that our accused products do not use VirnetX's technology,"
adding that the U.S. Patent and Trademark Office initially found
almost all of VirnetX's asserted claims to be invalid.
The win for Cisco comes after the Eastern District court last
month denied an effort by Apple Inc. (AAPL) to reduce a $368
million award the jury granted for alleged infringement of the same
patent.
Thursday's decision didn't directly affect the ruling against
Apple, and the court has denied Apple's request for a new trial on
the liability and damages portion of the verdict.
The case against Cisco, launched in 2010, accused the networking
company of violating one of its patents by selling routers designed
to run virtual private networks. Businesses and institutions rely
on VPNs to keep their users' Internet activity secure.
VirnetX had prevailed last month when the Patent and Trademark
Office rebuffed Cisco's challenge of the patent's validity. Cisco
Chief Executive John Chambers has criticized some technology
companies for filing intellectual property lawsuits that are seen
as stifling innovation.
Cisco shares ended little-changed at $21.59.
Write to Drew FitzGerald at andrew.fitzgerald@dowjones.com
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