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On Tuesday, Akamai (NASDAQ:AKAM) and MIT filed a patent infringement lawsuit against Cotendo in reference to patents 7,693,959, 6,820,133 and 7,293,093. I find this an interesting turn of events as in the past, Akamai tended not to sue any company until-- in my opinion-- they felt that company was starting to become competitive. Speedera was out in the market for a few years before Akamai sued them and Limelight (NASDAQ:LLNW) was operating for a couple years before Akamai went after them as well.

Cotendo has been around for just under two years, but with their recent deal with AT&T (NYSE:T) and some of Cotendo's recent wins, Cotendo has the potential to become a real competitor to Akamai, directly or indirectly via someone like AT&T, over time. If Cotendo was just offering CDN services I don't think Akamai would have really cared, but the fact that Cotendo focuses on DSA and app acceleration, services where there is a lot of high-margin business at stake, I'm not surprised to see the suit.

It's also interesting to see that one of the patents in question, 6,820,133, was acquired by Akamai in their acquisition of Netli and some of Cotendo's management team, including their VP of operations current CEO and Co-Founder, worked at Netli and Akamai in the past.

With Cotendo being as small as they are, I don't see how they can afford to fight this suit by themselves over a long period of time simply due to the capital it requires. The two companies could very well settle this by Akamai buying Cotendo, which Akamai has a history of doing when it acquired Speedera and tried to buy Limelight during the trial. It's also possible that AT&T could step in and acquire Cotendo and then fight the Akamai suit, since AT&T would have the resources to do so. I contacted AT&T to see if they wanted to speak about the suit but they had "no comment" and I don't have any public response from Cotendo that I can share at this time.

If Akamai acquired Cotendo, they would really lock down the app acceleration and DSA market by a very wide margin. But if AT&T is serious about getting into this space, you would think they would keep that from happening. This is going to be an interesting one to watch. For the lastest updates on all of the patents suits amongst the CDNs, or to see the history of the suits, you can visit www.cdnpatents.com , which will take you to most posts on the subject.

On a side note, for those wondering where the Akamai and Limelight suit stands, both companies are still waiting on a ruling from the Federal Court of the District Of California which is expected to come by the end of the year. Even if that happens, there is expected to be additional appeals, and it does not appear as if this suit will be resolved in the courts for another few years.

Disclosure: No positions

Source: Akamai Files Patent Infringement Lawsuit Against Cotendo, Acquisition on the Way?