FRAMINGHAM (05/05/2000) - Despite its positive outlook, Network Associates Inc. still faces major headaches. Chief among them is a patent infringement lawsuit that antivirus software competitor Trend Micro Inc. is pursuing against the firm.
In its lawsuit in U.S. District Court in San Jose, Trend Micro alleges McAfee antivirus software infringes on a patent awarded to Trend Micro in April 1997.
That patent, U.S. patent No. 5,623,600, covers computer-virus detection performed on an intermediate server - that might mean antivirus software running on an Internet gateway, firewall or even a NetWare server, according to Network Associates.
"We think this [suit] is questionable," Network Associates President Peter Watkins says. He adds that his company is presenting evidence that vendors such as Norman Defense and TIS deployed antivirus software on intermediate servers and firewalls long before Trend Micro filed for its patent in 1995.
However, Trend Micro has gotten some vendors to recognize the patent, with IBM paying a mere $1,000 to license it, Sybari paying $75,000 and Symantec ending its dispute over the patent by entering into a cross-licensing deal with Trend Micro this past year. Network Associates, which holds the lion's share of the antivirus market, refused to cave in and continues to fight.
If Trend Micro prevails, the firm will ask for substantial damages, says Dan Schrader, chief security analyst at the firm. Trend Micro will ask the court for an injunction against Network Associates using antivirus gateway technologies, which would likely impact sales of the McAfee WebShield and GroupShield products.
Network Associates expects Trend Micro to demand up to $100 million in damages as the conflict drags out about two more weeks in court. Regardless of which side wins, there will probably be an appeal.
"There's a fair amount riding on this, not just for Network Associates," Watkins says.