Cisco Systems Patent Victory Sends VirnetX Stock Over Cliff

CliffCisco Systems Inc. (NASDAQ:CSCO) won a patent-infringement lawsuit brought by VirnetX Holding Corp. (AMEX:VHC) in U.S. District Court for the Eastern District of Texas on Thursday. VirnetX, a company which specializes in licensing patents for revenue from its “portfolio of intellectual property,” saw its stock price plunge over 28 percent after the ruling on Thursday to close at $21.82 on Friday.

As reported by Bloomberg, VirnetX was suing over Cisco’s use of “routers, software and phones that have virtual-private-networking functions including its Unified Communications Manager, Telepresence or AnyConnect.”

This is the first major setback for VirnetX’s patent licensing and litigation business, which has won in settlement and damages awards from several large tech companies over the past few years.

Microsoft (NASDAQ:MSFT) settled a lawsuit with VirnetX in 2010 for $200 million over its use of VPN (Virtual Private Network) patents claimed by VirnetX, becoming its first patent licensee.

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In February of this year, VirnetX had a $368.2 million judgment against Apple (NASDAQ:AAPL) upheld regarding VPN connectivity used in Apple’s FaceTime video calling feature.

In its annual Securities and Exchange Commission filing, VirnetX describes its patent holdings as “20 patents in the United States and 32 foreign patents, as well as several pending U.S. and foreign patent applications.  Our patent portfolio is primarily focused on securing real-time communications over the Internet, as well as related services such as the establishment and maintenance of a secure domain name registry.”