LogMeIn Inc. must face a patent-infringement lawsuit filed by 01 Communique Laboratory Inc., a U.S. appeals court ruled today. 01 Communique soared 44 percent, while LogMeIn shares fell to the lowest in more than two years.
The U.S. Court of Appeals for the Federal Circuit said a trial judge erred in his interpretation of a patent owned by 01 Communique and vacated a ruling that LogMeIn didn’t infringe the patent. The case was sent back to the lower court for further proceedings.
The appeals court, which specializes in patent law, sided with 01 Communique on how the patented invention works. 01 Communique filed the lawsuit in 2010, claiming Woburn, Massachusetts-based LogMeIn infringed a patent related to a method of providing remote access to a desktop computer. 01 Communique, based in Mississauga, Ontario, runs the “I’m InTouch” remote access service.
The appeal turned on the question of whether the intermediary between a personal computer and a remote computer must be on a single server, as claimed by LogMeIn, or if it could be on multiple server computers. U.S. District Judge Claude Hilton in Alexandria, Virginia, had said the patent was limited to products on a single server, while LogMeIn’s software uses multiple servers.
The Federal Circuit said the patent wasn’t limited to a single server, and ruled instead it could comprise “one or more computers.”
“We’re feeling this is a step in the right direction,” Brian Stringer, 01 Communique’s chief financial officer, said in a telephone interview.
The company spent more than $30 million to develop its product, and serves mostly small and medium-sized companies, he said. A suit against Citrix Systems Inc. over the same patent has been on hold while the U.S. Patent and Trademark Office took a second look at it. Stringer said the examiner upheld the patent, and Citrix is challenging that decision.
In a statement, LogMeIn said it “continues to believe that it has strong defenses to the claims made by 01 Communique and intends to vigorously defend against these claims.”
01 Communique rose 37 Canadian cents to C$1.22 in Toronto. LogMeIn dropped $5.44, or 22 percent, to $18.95 in Nasdaq Stock market trading of 3.8 million shares, or more than 10 times the three-month daily average.
The case is 01 Communique Laboratory Inc. v. LogMeIn Inc., 2011-1403, U.S. Court of Appeals for the Federal Circuit (Washington). The lower court case is 01 Communique Laboratory Inc. v. LogMeIn Inc., 10cv1007, U.S. District Court for the Eastern District of Virginia (Alexandria).