Limelight wins early patent battle

Akamai's long-awaited patent case against Limelight Networks got underway yesterday in what could be a make or break litigation for Limelight. Limelight last week had a first-round win when the Massachusetts district court hearing the matter rejected two out of three of the patent claims. This saw Limelight's stock price jump, only to be buffeted by a downgrade from Jefferies analyst Katherine Egbert. Egbert noted the court agreed to hear submissions on a final patent--the same patent Akamai had successfully stopped Cable and Wireless from using. This is Akamai's first and most successful patent and was obtained from MIT under an exclusive license.

The battle between the CDN market leader Akamai and the aggressive new player on the block, Limelight, is being keenly watched by the online video industry with many wanting Limelight to succeed so as to ensure competitive pricing. The case finally began yesterday after nearly two years of legal preparations. Limelight is also facing a patent action from Level 3.

Predictions of a price war this year have not yet materialized as demand for video content delivery continues to surge. Much of this demand is coming from traditional media companies finally making content available online. Limelight over the weekend announced Doug Lindroth had joined the board. Lindroth is a former CFO of software company, BakBone Software.

In recent weeks, there have been market rumors of a Microsoft purchase of Limelight, but analysts believe a buyout is unlikely until the patent action is resolved. Limelight floated mid-last year and reached a high of $24.33 before collapsing to around $7.

For More:
- Limelight appoints Doug Lindroth to Board Release
- Limelight wins early patent skirmish Release

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