Microsoft Loses $106M Patent Case To VirnetX

microsoft loses 106 patent case to virnetx logo

A jury in the patent holder-friendly district of Tyler, Texas, has found Microsoft Corporation guilty of willful infringement on virtual private network (VPN) patents held by VirnetX, and ordered the company to pay $105.6 million in damages. Because the court found the infringement to be willful, the judge in the case could treble the damage award.

VirnetX brought the suit against Microsoft in 2007, and was originally seeking some $242 million in damages and an injunction against Microsoft’s continued use of the technology. The suit centered around two patents related to virtual private network (VPN) technology, that enables users to set up secure encrypted links between networks that are carried over an unsecure network—like the Internet—and be treated as if they were a member of a local secure-and-trusted network. The patents in question were originally developed by SAIC as part of work the company did for the Central Intelligence Agency; SAIC transferred the patents to VirnetX in 2006 in exchange for a share of royalties VirnetX generated from licensing the technology.

Microsoft is expected to appeal the ruling, and previously said that it believes that its VPN technology was developed independently does not infringe on VirnetX’s patents.

If the penalty holds, it’ll mark the second recent significant infringement loss for Microsoft: last year, jurors awarded some $290 million to i4i for Microsoft Office infringing on patents covering custom XML technology, and Microsoft has been forced to remove the technology from Microsoft Office while appealing the case. (So far, that isn’t going well.)