Message: Interesting $45 million patent infringement judgement
Limelight must pay $45M in patent suit
Andrew Johnson
The Arizona Republic
Feb. 29, 2008 03:15 PM
A U.S. District Court on Friday ordered Limelight Networks Inc. to pay $45.5 million to its rival Akamai Technologies Inc. in a long-running patent infringement lawsuit.
The ruling threatens to create a major barrier to how the Tempe-based online media company operates in the future, experts said.
Calls placed to Limelight were not immediately returned Friday.
Cambridge, Mass.-based Akamai had accused Limelight of ripping off technology that Akamai licensed from the Massachusetts Institute of Technology, which holds the patents on the technology.
Both Akamai and Limelight are "content delivery network," or CDN, providers.
They sell technology that enables companies to distribute video, audio and other media over the Internet.
The amount the jury ordered Limelight to pay includes $40.1million for Akamai's lost profits, $1.4 million in reasonable royalties and $4 million resulting from Akamai's having to lower its prices because of the patent infringement.
Limelight's shares sank more than 35 percent Friday, reaching an all-time low of $3.82.
That's a significant departure from the company's 52-week high of $24.33, which the company reached after pulling off a stellar initial public offering last June.
Limelight's shares closed down 26.5 percent Friday, at $4.68.
Akamai said it planned to seek a permanent injunction prohibiting Limelight from selling services covered by the patents.
In an interview with Bloomberg News, Michael Gordon, co-founder and chief strategic officer at Limelight, said that the company was "disappointed with the outcome."
"We believe Limelight will ultimately prevail," he said.
Jennifer Adams, an analyst at Cowen and Co. LLC, wrote that the verdict was a "significant setback for the company" in a research note she put out about the company on Friday.
However, she also wrote that paying the judgment should not be difficult for Limelight because it has about $200 million in cash on hand.
The ruling threatens to create a major barrier to how the Tempe-based online media company operates in the future, experts said.
Calls placed to Limelight were not immediately returned Friday.
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Cambridge, Mass.-based Akamai had accused Limelight of ripping off technology that Akamai licensed from the Massachusetts Institute of Technology, which holds the patents on the technology.
Both Akamai and Limelight are "content delivery network," or CDN, providers.
They sell technology that enables companies to distribute video, audio and other media over the Internet.
The amount the jury ordered Limelight to pay includes $40.1million for Akamai's lost profits, $1.4 million in reasonable royalties and $4 million resulting from Akamai's having to lower its prices because of the patent infringement.
Limelight's shares sank more than 35 percent Friday, reaching an all-time low of $3.82.
That's a significant departure from the company's 52-week high of $24.33, which the company reached after pulling off a stellar initial public offering last June.
Limelight's shares closed down 26.5 percent Friday, at $4.68.
Akamai said it planned to seek a permanent injunction prohibiting Limelight from selling services covered by the patents.
In an interview with Bloomberg News, Michael Gordon, co-founder and chief strategic officer at Limelight, said that the company was "disappointed with the outcome."
"We believe Limelight will ultimately prevail," he said.
Jennifer Adams, an analyst at Cowen and Co. LLC, wrote that the verdict was a "significant setback for the company" in a research note she put out about the company on Friday.
However, she also wrote that paying the judgment should not be difficult for Limelight because it has about $200 million in cash on hand.
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