Why Shares of VirnetX Popped

Why Shares of VirnetX Popped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Just two days after adding a new patent to its lawsuit against Apple, shares of network technology specialist VirnetX rose nearly 12% during intraday trading Thursday after the company announced it has signed a joint patent license agreement with business communications expert Avaya.

So what: Under the terms of the agreement, VirnetX has agreed to license certain patents to Avaya, in exchange for not only multiple initial payments to VirnetX, but also an "ongoing reasonable royalty for future sales through expiration of the licensed patents [related to] certain current and future IP-encrypted products."

In addition, Avaya has also agreed to license some of its own patents to VirnetX for use in its own Gabriel technology product development.

Now what: For those of you keeping track, this arrangement both enables VirtnetX to dismiss its long-standing patent infringement lawsuit brought against Avaya in 2011, and adds fuel to investors' hopes that the comparatively tiny company could be able to come out on top in its case against everybody's favorite Cupertino-based tech titan.

CEO Kendall Larsen weighed in to say, "We are pleased to have come to an agreement with Avaya on terms consistent with our VirnetX IP Licensing Program."

For now, anyway, shareholders are right to celebrate this one as a solid win for VirnetX.

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The article Why Shares of VirnetX Popped originally appeared on Fool.com.

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Originally published