After celebrating a $200 million win against Microsoft in a patent infringement lawsuit earlier this year, VirnetX Holding Corporation has secured a new patent adding to its portfolio of secure communication network protocol technologies. It’s a unique revenue strategy for the Internet security and software technology company based in Scotts Valley, California: leverage the company’s early patents to bring lawsuits against cash-rich tech sector legends who’ve likely infringed.VirnetX expects to stay engaged in commercializing its patent portfolio of over 48 U.S. and international patents and pending applications by developing a licensing program as well as developing software products. The products are designed to create a secure environment for real-time communication applications such as smart phones, instant messaging, VoIP, eReaders and video conferencing, which has recently been declared as essential for 4G security specifications.
The methods in the new patent, granted by the European Patent Office, are used to create a special kind of Virtual Private Network (VPN). This VPN not only includes the normal authentication and privacy, but also includes a stealth feature. This stealth feature is achieved by randomly changing the IP packet addresses on a packet-by-packet basis. Methods are described that enable the computers at each end of the VPN to use cryptographic techniques and synchronize the random address sequence. Third party observers cannot predict the sequence and the packets appear to be unrelated and not part of the same network connection.
What does that all mean? Really, really secure communications over the Internet. The patent was originally developed for protecting national security assets, but the company took a new direction during development by enabling sheer scale to protect valuable commercial assets as well.
In August, the company announced they would be filing additional lawsuits after posting $200 million in revenues for the second quarter of 2010, the result of a victorious judgment against Microsoft in the VirnetX patent infringement case settled this past summer. The company successfully proved Microsoft had implemented VirnetX’s technology in its Live Communicator products, despite Mircrosoft’s claim that the technology was obvious enough to software developers that there no need for a patent. The silver bullet was delivered when VirnetX’s lawyers revealed Microsoft had previously filed for the same patent with no approval.
Similar lawsuits have been brought on against Aastra USA, Inc., Aastra Technologies Ltd., Apple Inc., Cisco Systems, Inc., NEC Corporation, and the NEC Corporation. If the Microsoft case is any indication, VirnetX will continue to book award revenues in 2011.
Shares of the undisputed Internet security technology champ skyrocketed as high as $18.55 a share in October before deflating to today’s trading price of $13.44. Still, shares are trading up about 355% since we first reported on the VirnetX/Microsoft infringement case earlier this year.
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