Limelight Networks settles patent lawsuit

Limelight Networks Inc. in Tempe has settled a patent infringement lawsuit with competitor Two-Way Media LLC.

Under the agreement, Two-Way is dropping its lawsuit against the Limelight. In exchange, Limelight acquired a non-exclusive license that allows the company to use technology covered by Two-Way's patents.

Limelight disclosed the settlement Thursday in a U.S. Securities and Exchange Commission filing

Limelight's shares closed down 0.7 percent at $2.97 Thursday.

The settlement stems from a lawsuit Boulder, Colo.-based Two-Way filed in April in U.S. District Court for the Southern District of Texas against Limelight and several other "content-delivery network," or CDN, providers.

Limelight, one of the biggest CDN providers, stores videos, music files, animation graphics and other multimedia content in data servers for customers that have included Microsoft Corp., Nintendo Ltd., Electronic Arts and DreamWorks.

Limelight's fiber-optic network moves the content to people's computers as they download it on customer's Web sites.

Litigation between CDN providers has risen in the last two years as more competitors have entered the field. Internet retailer Amazon.com Inc, a customer of Limelight, announced this week it plans to offer such services. Telecommunications giant AT&T unveiled similar plans this summer.

Limelight faces two other patent suits. In February, a U.S. District Court jury for the District of Massachusetts ordered Limelight to pay Akamai Technologies Inc. $45.5 million for patent infringement.

Akamai, based in Cambridge, Mass. and considered the largest CDN provider, is seeking an injunction permanently barring Limelight from providing certain delivery services under its patents. A judge has yet to make a final decision on the matter.

Limelight Chairman and CEO Jeff Lunsford has said the technology in question in Akamai's suit accounts for about half its business. The company has begun focusing on new services, including the streaming of live events, to minimize the impact such a move would have. NBC recently tapped Limelight to deliver live and pre-recorded video footage of Olympic events for its NBCOlympics.com Web site. The summer games are considered to be the biggest live event to be streamed online in terms of the amount of content it entailed.

Broomfield, Colo.-based Level 3 Communications Inc. filed a patent-infringement lawsuit against Limelight in December. The case goes to jury trial in U.S. District Court for the Eastern District of Virginia on Oct. 14.

Last month a U.S. District Court judge for the District of Arizona dismissed a class-action lawsuit that shareholders filed against Limelight in August 2007.