Mediation In 01 Communique-Citrix Patent Dispute Cancelled

A mediation conference aimed at resolving the patent dispute between 01 Communique Laboratory Inc. (ONE.T) and Citrix Systems Inc. (CTXS) was cancelled because the parties negotiating positions are too far apart, sources told Dow Jones.

The conference had been scheduled to take place Tuesday. Sources couldn't say how far apart the parties were.

The next step could be the setting of a trial date if the judge grants 01's request to lift a stay in the case that has been in effect since March 2008. The court stayed the case at Citrix's request -- just weeks before the originally scheduled trial date -- to give the U.S. Patent and Trademark Office time to re-examine the disputed patent.

The USPTO upheld all claims in the patent in July 2010, setting the stage 01's request to lift the stay and the aborted mediation conference. The case is being heard in U.S. District Court for the Northern District of Ohio.

01 declined to comment for this story.

Officials from Citrix weren't immediately available for comment.

01 alleges that Citrix's "GoToMyPC" product infringes patented technology in 01's "I'm In Touch" product. The products allow users remote access to personal computers.

If the court lifts the stay, 01 appears to have the upper hand. That's because, at a key 2007 hearing, the court upheld 01's interpretation of 19 out of 20 claims in the disputed patent. In addition, the question of the patent's validity has already been settled by the USPTO. However, Citrix can appeal the USPTO's decision. If it does, it could also ask the Ohio court to maintain the stay pending the outcome of its appeal, which could take years.

As it stands, there is little pressure on Citrix to settle the case until judge Sara Lioi decides whether to lift the stay and set a trial date. If that scenario unfolds, the pressure on Citrix to settle would increase.

If it prevails, 01's potential windfall could be significant. The disputed patent doesn't expire until 2022 so 01 would receive royalties for about 12 years. The company is also seeking payment for past damages dating back to 2005 and it's alleging willful infringement, which could result in a tripling of damages.

In Toronto Thursday, 01 closed down 9 Canadian cents to C$1.42 on volume of 580,627 shares. The stock is up almost six-fold year to date, as investors anticipate a favorable resolution of the case.

Company Web Site: http://www.01com.com

-By Stuart Weinberg; Dow Jones Newswires; 416-306-2026;

stuart.weinberg@dowjones.com

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