In early 2008, Nework-1 sued several companies over the use of its Power-over-Ethernet patent, known as the “Remote Power Patent”. One of the companies accused of infringement was 3Com Corp. During the litigation, 3Com was purchased by Hewlett-Packard. In July 2010, 3Com, along with Hewlett-Packard, settled the issue with Network-1. The settlement covered 3Com products only. Hewlett-Packard sales were not included in this agreement. However, the agreement set up a framework for the HP and Network-1 to work out the issue in the future. The details of the settlement agreement may reveal what is ahead.
Two key points from the 3Com, HP, and NSSI agreement:
1. Venue for any subsequent litigation between the parties and concerning the '930 Patent shall be in EDTX in front of Judge Davis.
2. 180-day standstill for any litigation between the parties.
These two points tell us very important facts about the future. First of all, Hewlett Packard and Network-1 clearly have infringement and licensing issues that need to be resolved. The agreement implies the two are likely in some sort of licensing discussions. And, if the two parties are unable to come to an agreement, the case will be heard in the Eastern District of Texas with Judge Davis. This is very favorable for Network-1. The Eastern District of Texas is the same exact venue in which Network-1 emerged successful in its last litigation.
The legal hiatus lasts for 180 days. The date of this agreement was July 20th, 2010. Interestingly, this places the end of the standstill between Network-1 and HP on January 16, 2011—just one week away.
Since the large settlement with several companies this summer, Network-1 has been quiet on the licensing front. It seems logical that some sort of action—either a licensing agreement or a litigation filing—will follow shortly after this significant date.
Remember, PoE is a widely used and fast growing technology. Hundreds of companies sell PoE products and are likely violating Network-1’s Remote Power Patent. With this possibility, taking a speculative position at these levels could turn out well for investors.