Akamai Loses Patent Ruling Against Limelight Networks

Akamai Technologies Inc. lost a court ruling in its four-year patent battle with Limelight Networks Inc. over software that speeds delivery of Web videos.

Akamai fell 3.3 percent in Nasdaq Stock Market trading after the U.S. Court of Appeals for the Federal Circuit in Washington said Limelight didn’t infringe a patent related to content delivery networks, or CDNs. U.S. District Judge Rya Zobel in Boston was correct to throw out a $45.5 million jury verdict that Akamai won in 2008, the appeals court said today.

“We are disappointed with the decision and are evaluating our options,” Jeff Young, a spokesman for Cambridge, Massachusetts-based Akamai, said by telephone. “We believe Akamai has tremendously valuable intellectual property and we remain resolved to vigorously defend it when appropriate.”

Akamai is facing more competition from companies including Limelight, Level 3 Communications Inc. and Cotendo Inc. for CDNs, which distribute movies, music and software to computers on behalf of services such as Hulu LLC and Netflix Inc. Online video sales will expand 20 percent to $600 million this year from 2009, research company Frost & Sullivan Inc. estimates.

Akamai’s lawsuit in in 2006 accused Tempe, Arizona-based Limelight of building its business on technology developed by Akamai’s founders at the Massachusetts Institute of Technology.

Akamai Shares

Limelight said in a statement that today’s court decision “affirms that Limelight Networks respects the intellectual property of others, and that our growth and success have been achieved through the innovation of our founders and engineers.”

“Akamai put itself in a position of having to show that the allegedly infringing activities of Limelight’s customers were attributable to Limelight,” the three-judge panel said in an opinion on its website. “Akamai did not meet this burden.”

Akamai fell $1.70 to $49.17 at 4 p.m. New York time. Limelight fell 1 cent to $6.24.

Akamai and MIT filed a patent-infringement lawsuit against closely held Cotendo on Nov. 9. Limelight won a 2009 trial in a patent case brought by Level 3, and an appeals court on May 5 upheld the jury verdict of non-infringement.

The case today is Akamai Technologies v. Limelight Networks, 2009-1372, U.S. Court of Appeals for the Federal Circuit (Washington). The lower court case is Akamai Technologies v. Limelight Networks Inc., 06cv11109, U.S. District Court, District of Massachusetts (Boston).

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