Palo Alto Networks will make a one-time $175 million payment to Juniper Networks to end a longstanding patent dispute between the two companies.
Both vendors revealed the end to the dispute Wednesday in which Juniper accepted the payment, which consists of $75 million in cash, $70 million in shares of common stock and a warrant to purchase $30 million in common stock.
Under the terms of the settlement agreement, Juniper and Palo Alto agreed to dismiss all patent litigation, license the patents in dispute for the life of the patents and agreed not to sue each other for patent infringement for eight years.
“Juniper Networks initiated this litigation in order to protect our intellectual property and investment in innovation that is reflected in our leading security products,” said Mitchell Gaynor, executive vice president and general counsel at, Juniper, in a statement. “This settlement fully achieves those objectives, and we are very pleased with this resolution.”
Palo Alto Networks president and CEO Mark McLaughlin said the company is pleased to move past the patent dispute.
"While we are confident of our position in the case, we believe this outcome is in the best long-term interest of our shareholders and customers as it allows us to further focus our efforts on what we do best: innovating, growing the business, and solving the toughest cybersecurity problems for our customers,” McLaughlin said in a statement. The company's shares were trading up nearly 11 percent in after-hours trading following the settlement news to $77 from a market close of $69.51.
Juniper filed a patent infringement lawsuit in 2011, accusing Palo Alto of infringing on security six patents used in its firewall technology. The complaint alleges that Palo Alto co-founders Nir Zuk and Yuming Mao, both former Juniper executives, built Palo Alto with Juniper’s technology at its core.
The lawsuit focused on patents that Juniper received following its $4 billion acquisition of NetScreen Technologies in 2004. Zuk and Mao joined Juniper with that merger, but left about two years later to found Palo Alto in 2005. It alleged that Zuk and Mao personally worked on the six patents and claimed that they actively recruited Juniper employees. Palo Alto countered Juniper with its own intellectual property infringement claims. The dispute finally went to court in January.
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