VirnetX Falls as Texas Jury Struggles in Cisco Patent Case

VirnetX Holding Corp. (VHC) fell as much as 27 percent after a federal jury in Tyler, Texas, said it was struggling to reach a unanimous verdict in its patent- infringement case against Cisco Systems Inc. (CSCO)

After the jury told the judge it was deadlocked, U.S. District Judge Leonard Davis told jurors to continue deliberating. VirnetX was down $5.83, or 16 percent, to $29.84 in New York trading at 3:07 p.m. Earlier, it tumbled as low as $26.02 for its biggest drop since August.

VirnetX contends Cisco infringes four patents for virtual private networks, through which a website owner can securely interact with a customer or an employee can work at home and have protected access to a company’s electronic files. It’s seeking $258 million from San Jose, California-based Cisco.

Cisco, the world’s biggest maker of computer-networking equipment, denies infringing the patents and contends they are invalid. Cisco rose less than 1 cent to $21.58.

VirnetX won a $368.2 million verdict against Apple Inc. (AAPL) in November over the same technology, including two of the same patents, before a different Tyler jury. In 2010, Zephyr Cove, Nevada-based VirnetX reached a $200 million settlement with Microsoft Corp. over the same inventions.

The case is VirnetX Inc. v. Cisco Systems Inc., 10cv417, U.S. District Court for the Eastern District of Texas (Tyler).

To contact the reporter on this story: Susan Decker in Washington at sdecker1@bloomberg.net

To contact the editor responsible for this story: Bernard Kohn at bkohn2@bloomberg.net