Level 3 Patent Filing Against Limelight CDN Won't Stop Potential Customers

I got a hold of the filing and all of the documents associated with the Level 3 (LVLT) patent infringement suit against Limelight Networks (LLNW) as it pertains to Limelight's CDN offering. (Download filing)

The filing talks to four CDN specific Level 3 patents including 6,185,598 - 6,473,405 - 6,654,807 - 7,054,935 some of which were originally granted to Sandpiper Networks back in 1998. After quickly reading through all of the documents two major things come to light.

The first is that the filing states that Level 3 sent Limelight a letter in February of 2007 informing Limelight of various patents owned by Level 3 that pertain to content delivery. Level 3 believes that after Limelight received knowledge of these Level 3 patents, Limelight did not re-design its CDN offering to avoid the claims of the patents.

While I don't expect Limelight to be able to talk about the suit publicly, the fact that it had knowledge of the patents for nearly all of 2007 and didn't feel the need to license the patents from Level 3, that would lead one to think that Limelight feels it is not infringing on the patents, or feels strongly that the patents will not hold up in court.

The second thing to note in the filing is that Level 3 says it is suffering damages in "an amount not yet determined" and as of the filing, Level 3 is not asking for any specific amount in damages. For those who I know are going to ask, I don't expect this suit to stop any potential customers from using Limelight networks. The CDN space has seen many patent suits over the past 10 years and typically, customers don't have any real concern as nearly all of the major CDNs have gone through patent suits at one time or another.

Note: While I have worked as a consultant and expert witness on various patent suits pertaining to IP based video, I am not working on this case and have never worked on any lawsuit involving any content delivery network.

Comments

[leojbourne]

So what's the bottom line? Is LVLT a buy or a sell? Patent suits often don't do much besides enrich the lawyers, but I'm sure LVLT would love to be an exception to that.

[ED K]

IF LEVEL 3 WERE TO PREVAIL AND RECEIVE A LARGE AMOUNT OF CASH ,IT COULD HELP THEM AS THEIR DEBT LOAD IS MONUMENTAL.