Microsoft pays $200 million for VirnetX licence

May 18, 2010 // 11:38 a.m.

Tags: #lawsuit #microsoft #microsoft-licences-virnetx #patent #virnetx #virnetx-patent #virnetx-sues-microsoft #vpn #vpn-patent

Microsoft has bought its way out of an embarrassing situation after being caught using VPN technology covered by a VirnetX-owned patent - and it's cost the company a pretty penny.

The company was found guilty of using technology originally developed by SAIC for the US Central Intelligence Agency and since patented and purchased by VPN specialist VirnetX in its Windows VPN subsystem back in March - as a result of which it was ordered to cease its infringement and pay the company $105.6 million in damages.

Sadly, that just wasn't an option for Microsoft: with all current versions of Windows featuring the patented VPN technology, to 'cease infringement' would have meant the withdrawal from sale of all copies of its operating system - an infeasible suggestion.

Accordingly, the company has just announced that it has, instead, reached a licensing agreement with VirnetX that sees it granted a irrevocable right to use the company's VPN technology and the dismissal of all active and pending lawsuits regarding the matter in exchange for a one-off payment of $200 million (around £135 million) - almost double the damages originally awarded by the court.

Microsoft's corporate vice president and deputy general counsel Tom Burt said in a statement that his company is "pleased to work with VirnetX to bring these cases to a successful resolution through this settlement," although both companies are keeping the precise details of the agreement quiet.

Do you believe this is a win for the little guy, or should Microsoft have fought its corner more forcefully over this one? Share your thoughts over in the forums.

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