Optical/IP Networks

F5 Guards Its Cookies

The gloves are off as load-balancing vendor F5 Networks Inc. (Nasdaq: FFIV) prepares to take on three of its competitors over patent infringement. Earlier this week the company filed a lawsuit against Israeli-based Radware Ltd. (Nasdaq: RDWR) and two other firms, claiming they are violating F5's cookie persistence patent.

Yesterday, Radware issued a press release in which its CEO Roy Zisapel stated that, although the company hadn’t been served with court documents related to the suit, he believes that the case is without merit. Zisapel also said that the claims made in the suit do not affect any of the company’s core technology (see F5 Sues Radware).

The other two companies named in the suit are Array Networks Inc. and NetScaler Inc. F5 is seeking an injunction and damages for the alleged patent infringement.

On Wednesday, F5 announced it had filed suit, and in the same press release, it announced it had been awarded the patent on which it claims these companies have infringed. According to Joanne Riter, F5’s legal counsel, U.S. Patent No. 6,473,802, had been awarded back in September 2002, but the company had not announced it until this week for strategic reasons.

The patent, entitled "Method and System for Storing Load Balancing Information with an HTTP Cookie," enables cookie persistence, which is a function of a Web browser that allows an individual to reconnect with a specific server. The cookie lets the server know that a particular user has already visited the site.

F5 and Radware are both small public companies chasing after a small niche within the Ethernet switch market. The sale of Layer 4-7 switching products only generated $519 million in 2002 and is only expected to grow to $570 million in the next two years, according to Infonetics Research Inc..

Within that market, F5 and Radware are tight competitors, both vying for the number three position after Cisco Systems Inc. (Nasdaq: CSCO) and Nortel Networks Corp. (NYSE/Toronto: NT). In the fourth quarter of 2002, F5 had about 13 percent of the market, while Radware had 10 percent, according to Infonetics. Another competitor, Extreme Networks Inc. (Nasdaq: EXTR) is rumored to be exiting the market (see Extreme to Dump Layer 4-7 Switching?).

Stephen Kamman, an analyst with CIBC World Markets, who covers Radware, says that the court case will likely have little impact on either company’s stock price.

“This could drag on for years,” he says. “I doubt we’ll see any sort of injunction here, and in the worst-case scenario Radware will probably have to license the technology.”

Radware is trading up $0.32 (3.32%) to $9.95. F5’s price remains unchanged at $13.55.

— Marguerite Reardon, Senior Editor, Light Reading

crubin 12/5/2012 | 12:23:44 AM
re: F5 Guards Its Cookies Interesting that F5 chose only to sue other small fry, rather than taking on Cisco and Nortel/Alteon. Don't they use the same technology as well?
erbiumfiber 12/5/2012 | 12:23:43 AM
re: F5 Guards Its Cookies Classic patent strategy-sue little guys, get a bunch of people to take licenses then go after the big boys having shown "widespread industry acceptance" of the patent tending to uphold both patent validity and its coverage of the technology in question. Very common strategy and makes lots of sense from the patentee's point of view...
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