Finally, some good news for battered CDN Limelight Networks (LLNW). Akamai’s (AKAM) suit against Limelight for patent infringement was dealt another blow last week when the judge denied Akamai’s motion for immediate judgment.
According to ours and others’ reading of the case, Akamai filed the motion because it believes the way the judge has defined the terms will make the case hard for Akamai to win. Akamai doesn’t want to fight a battle it knows it will lose, so it was hoping to have the judge quickly declare a verdict for Limelight–at which point Akamai would immediately appeal. According to one source, these cases are often reversed on appeal, so Akamai’s strategy seemed reasonable. Alas, the judge rejected its motion, meaning that the case will now head to trial.
The bad news for Limelight, as highlighted by Morgan Stanley’s Peter Kuper this morning, is that Akamai’s obvious intention to appeal will likely make the case drag out (keeping an overhang on the stock). The good news is that Akamai will have to proceed with a trial that it apparently thinks it will lose. From our lay perspective, this decision would also seem to increase the likelihood of a settlement–which would be helpful for the stocks of both companies. The larger issue for both is the ongoing CDN price war.
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