Microsoft Settles With Alacritech

Goliath settled with David on Wednesday, when Microsoft settled a patent infringement suit brought by Alacritech.

San Jose, Calif.-based Alacritech sells a line of TCP/IP network interface cards (TNICs) that circumvent sludgy network protocol processing to speed the delivery of data in servers, network-attached storage and iSCSI storage devices.

Both Microsoft and networking giant Broadcom agreed to license patents relating to the SLIC architecture used in the accelerators. Broadcom will incorporate it into its Broadcom NetXtreme II technology, to be used with Windows Server 2003.

In addition, Alacritech signed cross-licensing agreements that will give it access to some of Microsoft’s and Broadcom’s networking patents; The three companies plan to cooperate on products in the future.

“We expect this is just a start,” said Joe Gervais, vice president at Alacritech. “As Internet speeds get faster and faster broadband connections penetrate further into homes, there will be more of a need to move data efficiently. We see dynamic TCP offload as a good way to do this, and we expect further partnerships as well.”

Privately held Alacritech brought suit against the Redmond giant in August 2004. The company claimed that the TCP Chimney offload architecture contained in Microsoft’s forthcoming version of Windows, Longhorn, contained its intellectual property.

TCP Chimney offloads the TCP protocol stack to a network interface card for better network performance. The architecture will also be used in the Scalable Networking Pack for Windows Server 2003.

Alacritech’s leverage increased in April 2005, when a district court judge granted a preliminary injunction against Microsoft’s use of the architecture. Alacritech owns two fundamental patents relating to scalable networking: U.S. Patent No. 6,427,171 and U.S. Patent No. 6,697,868, both entitled “Protocol Processing Stack for use with Intelligent Network Interface Device.”

According to the complaint, Alacritech demonstrated its own Dynamic TCP Offload Architecture, now called SLIC Technology, to Redmond engineers under non-disclosure in September 1998, and followed that up with documentation for integrating that with Windows. Microsoft broke off licensing talks but used the architecture, Alacritech said.

Microsoft, itself a patenting powerhouse, seems to be in a settling mood.

In April 2004, it cleared a patent infringement suit with DRM technology vendor InterTrust. That same month, it paid Sun Microsystems $1.95 billion to end IP disputes. Both settlements also involved cross-licensing agreements.

In March 2005, the giant software vendor paid Burst.com $60 million for a one-time license of Burst’s patents on media delivery. Burst sued in June 2002, claiming it had disclosed proprietary information to Microsoft during licensing talks, which Microsoft then cut off.