Network-1 settles patent litigation with Avaya

IP licensing company Network-1 Technologies said it agreed to settle its patent litigation against Avaya, Inc. pending in the US District Court for the Eastern District of Texas, Tyler Division, for infringement of Network-1’s Remote Power Patent.

The Remote Power Patent relates to, among other things, delivering power over Ethernet cables to remotely power network connected devices including, among others, wireless switches, wireless access points, VoIP telephones and network cameras.

The settlement is subject to approval of the US Bankruptcy Court of the Southern District of New York.

Avaya was one of 16 original defendants and affiliated entities named in the litigation.

As part of the settlement, Avaya has entered into a settlement agreement and non-exclusive license agreement for the full term of the Remote Power Patent, which expires in March 2020.

“Under the terms of the license, Avaya will pay a lump sum amount for sales of certain designated Power over Ethernet (PoE) products, and a running royalty for other designated PoE products … ” said Network-1.

“On January 19, 2017, Avaya, and certain of its affiliates, as debtors, filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court of the Southern District of New York.

“As part of the settlement, Avaya agreed that Network-1 shall have an allowed general unsecured claim in the amount of $40,000,000 ($40 million) relating to all acts occurring on or before January 19, 2017.

“A hearing before the Bankruptcy Court to consider approval of the settlement is currently expected to occur on or about October 12, 2017.

“Under the Debtors’ First Amended Joint Chapter 11 Plan of Reorganization of Avaya Inc. and Its Debtor Affiliates which the debtors filed with the Bankruptcy Court on August 24, 2017, and for which creditor votes are currently being solicited, the debtors have estimated that the total amount of general unsecured claims that will ultimately be allowed will total approximately $305,000,000 ($305 million) which, based on the treatment of general unsecured creditors therein, would result in estimated recoveries for the holders of general unsecured claims of approximately 19.7%.

“The debtors have acknowledged in the plan that depending on its ability to successfully prosecute or otherwise reduce the remaining outstanding claims, the total amount of the general unsecured claims could be substantially higher which would decrease the percentage recoveries to the holders of general unsecured claims, including Network-1.

“In such an event, the amount recovered by Network-1 under its allowed claim could be substantially lower than 19.7%.

“A hearing to consider confirmation of the plan is currently scheduled to commence on November 15, 2017.

“There is no assurance that the Bankruptcy Court will confirm the plan or any other Chapter 11 plan, and no assurance of the recovery for general unsecured claims under either the plan or any other Chapter 11 plan.”

Network-1 said it has now reached settlement and license agreements with 14 of the original defendants.

It said the remaining two defendants in the lawsuit are Hewlett-Packard Company and Juniper Networks, Inc.

“Network-1 seeks monetary damages based upon reasonable royalties,” added Network-1.

“The first of the trials for the remaining defendants is scheduled to commence in November 2017.”