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Finisar Patent Ruling Goes Back

A Finisar Corp. (Nasdaq: FNSR) patent judgement against DirecTV Group Inc. (NYSE: DTV) is getting reconsidered by the courts, but it's not immediately clear whether that's going to alter the other lawsuits involving that same patent.

In 2006, a jury awarded Finisar $78.9 million in damages, plus another $25 million for willful infringement, over patent 5,404,505, which relates to scheduled program transmissions.

Today, the U.S. Court of Appeals erased that judgment, ruling that the district court blew it by not realizing that prior art -- inventions existing at the time -- nullified one of Finisar's seven claims of infringement. That claim got tossed out, and the other six will have to be reconsidered.

In other words, the case is starting over. (See Finisar Ruling Vacated.)

What's interesting is that the same patent is the subject of other lawsuits. Finisar sued XM Satellite Radio (Nasdaq: XMSR) and Sirius Satellite Radio (Nasdaq: SIRI) last year. Meanwhile, Comcast Corp. (Nasdaq: CMCSA, CMCSK) and EchoStar Satellite LLC , in pre-emptive strikes, filed separate suits trying to get the '505 patent declared invalid. (See Finisar Suit Rocks XM, Sirius.)

The effect of today's ruling on those cases could be a "mixed bag," says Finisar CFO Steve Workman. Because the cases don't rely on identical arguments, it's possible some could be affected while others aren't.

This is all keeping Finisar's legal department busy, but it's not likely to affect the company's core business. The '505 patent was granted to Frank Levinson, a Finisar founder, but it hasn't really come into play in the optical components business.

— Craig Matsumoto, West Coast Editor, Light Reading

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