Suing a start-up has never won sympathy, especially when the party suing is a fairly large company, with power and experience. Yesterday, Akamai Technologies Inc. (Nasdaq: AKAM) sued Cotendo Inc. for patent infringement in the US District Court for the District of Massachusetts. The Massachusetts Institute of Technology (MIT) joined Akamai because Akamai began as an entry in an MIT competition in the late 1990s, and one of Akamai's patents is licensed from MIT.
Akamai has a market cap of $9.5 billion.
Both Akamai and Cotendo operate in the field of content delivery networks (CDN) and site acceleration solutions. The lawsuit pits the old-timer in the field, Akamai, against the next-generation CDN technology developer.
Cotendo CEO Ronni Zehavi, CTO David Drai, and VP R&D Udi Trugman co-founded the company in 2008. According to the Israel Venture Capital Association, it has raised $22 million to date from Benchmark Capital, Sequoia Capital, and Tenaya Capital. The company had $8 million in sales in 2009.
Changes in the CDN sector have put Cotendo in a respectable position among companies sued by Akamai lately, and it is possible that the lawsuit will end as something else altogether. In 2005, Akamai acquired Speedera for $130 million, even as a trial was underway in a suit filed by Akamai against the company. There has been speculation that Akamai might buy rival Limelight during a trial underway since 2006 for patent infringement. It is possible that Cotendo, too, will end up with an acquisition deal from some company or other.
Cotendo was unavailable for comment.
Published by Globes [online], Israel business news - www.globes-online.com - on November 11, 2010
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