Microsoft Corp. has agreed to pay VirnetX Holding Corp. $23 million to settle patent claims over secure communication networks. VirnetX rose the most in two years.
It's the second settlement in which the two companies have been able to reach an agreement over patents; Microsoft paid $200 million in 2010. Under the new pact, the earlier license Microsoft signed gets expanded, limiting the chances of further lawsuits, according to a statement by the companies Friday.
The $23 million from Redmond, Wash.-based Microsoft is about 10 times the amount of money VirnetX brought in from its licensing in 2013. VirnetX, based in Zephyr Cove, Nev., gets all of its revenue from patents.
The latest case was filed last year and targeted Microsoft's Skype unit, which allows instant messaging and Internet calling. The agreement came after U.S. District Judge Leonard Davis in Tyler, Texas, issued an order giving definitions to key terms in the VirnetX patents. The order is a key part of patent litigation because it helps both sides gauge the eventual likelihood of success.
Leidos Holdings Inc., formerly SAIC Inc., is entitled to 35 percent of the proceeds of any litigation with Microsoft after certain costs, said Daniel McGlinchey, managing director of Emerging Growth Equities Ltd., citing regulatory filings from the two companies.
VirnetX still has a case pending against Apple Inc. over the iPhone maker's VPN on Demand and FaceTime features. An appeals court last week rejected a bid to reinstate a $368.2 million damage award against Apple and sent the case back to Davis in Texas for further proceedings.
-- Bloomberg News