Network-1 Technologies (NTIP), Polycom (PLCM) Settle Patent Litigation

October 4, 2016 4:49 PM EDT
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Network-1 Technologies, Inc. (NYSE: NTIP) announced today that it agreed to settle its patent litigation against Polycom, Inc. (Nasdaq: PLCM) pending in the United States District Court for the Eastern District of Texas, Tyler Division, for infringement of Network-1's Remote Power Patent (U.S. Patent No. 6,218,930). Polycom was one of sixteen original defendants named in the litigation.

Under the terms of the settlement, Polycom will license the Remote Power Patent for its full term which expires in March 2020, and pay a license initiation fee of $5,000,000 for past sales of its Power over Ethernet ("PoE") products. In addition, Polycom will pay ongoing royalties based on its sales its PoE products, including those PoE products which comply with the Institute of Electrical and Electronic Engineers ("IEEE") 802.3af and 802.3at Standards. $2,000,000 of the license initiation fee will be paid within 30 days and the balance will be paid in three annual installments of $1,000,000 beginning in October, 2017. Payments due in October 2018 and October 2019 need not be paid if all asserted claims of the Remote Power Patent have been found invalid.

In September 2011, the Company initiated patent litigation against sixteen data networking equipment manufacturers in the United States District Court for the Eastern District of Texas, Tyler Division, for infringement of its Remote Power Patent. Network-1 previously reached settlement and license agreements with eleven of the original defendants. The remaining four defendants in the lawsuit are Avaya Inc., AXIS Communications Inc., Hewlett-Packard Company, and Juniper Networks, Inc. Network-1 seeks monetary damages based upon reasonable royalties.

The Remote Power Patent relates to, among other things, delivering power over Ethernet cables to remotely power network connected devices including, among others, wireless access points, VoIP telephones and network cameras. In June 2003, the IEEE approved the 802.3af PoE Standard. The IEEE also approved the 802.3at Power over Ethernet Plus (PoE Plus) Standard, which increased the maximum power delivered to network devices to 40-60 watts from the current 15 watts under the 802.3af Standard.

Network-1 currently has twenty-five license agreements with respect to its Remote Power Patent, which include, among others, license agreements with Cisco Systems, Inc., Extreme Networks, Inc., Netgear Inc., Dell, Inc., Alcatel-Lucent USA, Sony Corporation, Shoretel Inc., Microsemi Corporation, Motorola Solutions, Inc., NEC Corporation, Samsung Electronics Co., Ltd., and several other data networking vendors.

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