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Limelight Sued by Akamai

Patent infringement lawsuits seem to be coming at a fast and furious rate.  Om Malik’s latest scoop is that Limelight Networks (the content distribution network behind such notables as YouTube) is being sued by Akamai.  Akamai, of course, is the grand-daddy of content distribution networks.   

I can’t comment on the validity of the suit, obviously, but as I’ve written before, patents need to be a part of any start-up’s strategy.  Few companies can afford, or wish to pursue, an offensive patent strategy, such as the strategy being pursued by Akamai.  But that isn’t the only use for patents, and in some cases the best defense is a strong offensive capability.

If you make patent protection part of your business strategy, here are the benefits you might expect to see:

  1. Increased valuation.  Being able to say that your intellectual property is protected can raise the value of your company to either an acquirer or to a VC.  Large acquirers routinely value patent portfolios as part of a transaction.
  2. Defensive weaponery.  Limelight is being challenged by Akamai.   Would the story be different if Limelight’s portfolio included a patent that read on Akamai’s?  At that point, neither party can use the IP, and a cross license is the only route forward for both.
  3. Cross licensing currency.  You may encounter a situation where you need intellectual property owned by another company.  Having currency of your own, in the form of a strong portfolio of patents, may allow you to negotiate a royalty-free license from the other company.

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