Network-1 Solidifies Patent Validity; Launches Audit Against Cisco

Dustin Moore profile picture
Dustin Moore


  • Recent key decision by Patent Office on a Network-1 patent helps to solidify a major revenue stream.
  • Company quietly launched an audit on Cisco's royalty payments. Based on preliminary audit findings, Network-1 "believe[s] there will be additional royalties due".
  • Audit could positively impact revenue projections by of several million over the patent's life.
  • There is a total lack of coverage and analysis of these developments in the investment world.

Often overlooked Network-1 Technologies (NYSE:NTIP) owns an important and very valuable piece of intellectual property. Patent number 6,218,930, referred to as the Remote Power Patent, describes a method of sending a low level current to a connected device to determine whether that device is ready to receive power. This technology is critical for modern networks to ensure devices efficiently receive the correct amount of power, without risk of damaging devices. The Remote Power Patent was explicitly mentioned by the standardization taskforce while they were crafting the 802.3af Power of Ethernet (PoE) technical standards back in 2001. The 802.3af standard was eventually adopted in 2003 and is now ubiquitously entrenched in modern data networking equipment.

Network-1 believes that all 802.3af compliant products utilize the technology claimed by this patent. In fact, in July 2010, Cisco Systems (CSCO) settled litigation and took a license for the Remote Power Patent covering all 802.3af compliant products sold by the company. Cisco agreed to pay Network-1 up to a total amount of $112 million, under certain conditions. $32 million was paid upfront in 2010. In addition, Cisco is required to fork out future royalty payments up to $8 million a year through 2015 and up to $9 million thereafter until the end of the life of the patent in 2020.

Network-1 has now negotiated a total of 16 license agreements with respect to the Remote Power Patent, including Extreme Networks, Netgear, Motorola Solutions, and several other data networking equipment manufactures. Twelve of these are currently producing ongoing royalties. In September 2011 the company filed a second round of patent infringement suits against 16 companies.

This second round of litigation was stayed, or put on hold, pending an Inter Partes Review or "IPR" of the Remote Power Patent with the United States Patent and Trademark Office (USPTO). The IPR request

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Dustin Moore profile picture
Dustin Moore is a research writer focusing on smaller companies and technologies. He enjoys diving deep into very specific technologies/companies/topics and connecting complex information back to relevant audiences in digestible, easy-to-understand articles.

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