InterDigital, Inc. has acquired a sizable new patent portfolio from a now-defunct content delivery network (CDN) provider. Late last year, Edgio (f/k/a Limelight Networks), once a mainstay in the CDN space, entered into Chapter 11 bankruptcy and sold off various aspects of its business and assets in the process—including its patent portfolio, for which InterDigital subsidiary DRNC Holdings, Inc. submitted the winning bid in November. However, that deal almost fell apart in the final stretch after Edgio, two days after it signed the parties’ Patent Purchase Agreement, made a new demand for a license-back agreement.

Edgio, formed in 2001 as Limelight Networks, went public in 2007. However, the company ran into trouble in the wake of its 2022 acquisition of Edgecast, a CDN provider focused on edge security, content delivery and video services, from Yahoo, in a deal valued at approximately $300M. Multiple industry players, including Edgio and competitors Akamai Technologies and Fastly, were already facing headwinds through a reportedly “historic slowdown in Internet traffic growth”, prompting Akamai to lay off 2.5% of its workforce and Fastly, 11%.

Yet Edgio was hardest hit: In September 2024, CEO Todd Hinders—who assumed that role that same January after a leadership shakeup—announced that it had filed for Chapter 11 bankruptcy protection in the Bankruptcy Court for the District of Delaware after the company failed to “grow the revenues of [its] non-[CDN] businesses quickly enough to offset the costs of operating two bespoke engineered, equally sized global CDNs”. Beyond those challenges, Edgio’s stock price also suffered in early 2023 after the company disclosed that it had to restate nearly three years of its financial reporting (for fiscal years 2020, 2021, and 2022) “due to an error in its accounting treatment of certain sales of assets to customers” (as later stated to the court by Hinders).

The company stated that it had sought Chapter 11 protection in an attempt to avoid disruptions to its operations despite those challenges. It announced that its primary lender, Lynrock Lake Master Fund LP, had made a $110M credit bid for certain assets under a stalking horse asset purchase agreement with Edgio. (A stalking horse bid is designed to set a minimum price for a bankrupt company’s assets in order to avoid low bids.)

However, the company did not survive bankruptcy intact, with the court ultimately approving the sale of its assets to multiple acquirors. On November 26, the court allowed former competitor Akamai to acquire certain assets, including certain Edgio customer contracts from its content delivery and security businesses and a non-exclusive license to patents in Edgio’s portfolio, that sale closing on December 13 for a reported $125M. (That result is particularly notable given the patent dispute that played out between Akamai and Limelight over ten years ago, which partly resulted in a notable series of appellate decisions on divided infringement, including a 2014 opinion from the US Supreme Court and a 2015 en banc ruling from the Federal Circuit.) On November 13, Edgio and its “debtor affiliates” (collectively, the “debtors”) accepted a bid to acquire Edgio’s patent portfolio by DRNC Holdings, a subsequently filed Patent Purchase Agreement listing a price of $4.25M. The court’s November 26 order approving that sale (reissued in corrected form on December 2) stated that DRNC Holdings would assume the license agreement granting rights to Akamai.

Also on November 26, Lynrock was cleared to acquire the business of Edgio subsidiary Uplynk. Most recently, as confirmed on January 27, Parler Cloud Technologies—which, among other offerings, runs the right-wing social media network Parler, the decentralized video-sharing network PlayTV, and payment service ParlerPay—announced that it would acquire Edgio’s EdgeCast CDN business for $5M (with an option to permanently acquire certain IP address assets, initially covered by a one-year license, for $2.5M), through which it expected to hire 120 employees; as well as the separate acquisition of unrelated open-source cloud management platform Triton DataCenter. That same court filing also confirms that Encore Technologies had agreed to acquire Edgio’s Limelight CDN.

Yet the DRNC Holdings deal soon ran into trouble, as noted above—beginning soon after the parties signed a Patent Purchase Agreement on December 13 (DRNC later stating that while it had preferred to close quickly, the debtors had wanted to wait to complete the aforementioned sale to Akamai, which it did that same day). Payment had been set to occur on December 16, but, on December 15, the debtors “suddenly demanded a blanket license-back agreement from the Purchaser that was never part of the bargain”, DRNC alleged in a December 20 motion to enforce the sale order and Patent Purchase Agreement and to compel performance.

This was apparently the first time such a demand had been made, per DRNC: While the debtors had allegedly sought a temporary covenant not to sue in order to cover the Akamai sale through the end of that deal’s transitional period, DRNC states that instead it only agreed to “make an exception for limited continued use” during that period. DRNC alleges that it rejected what it characterized as a “last-minute effort to strong arm a material modification to the fully-executed Patent Purchase Agreement” and states that it paid the purchase price the next day, on December 16 as originally contemplated, and stated that it waived any “remaining conditions to closing”. DRNC then sent a letter demanding that the debtors assign the patents as had been agreed. Instead, one day later, the debtors claimed that closing had not yet occurred, prompting DRNC to file its motion—in which it contended that the debtors had not justified the assertion that closing had not taken place.

In a December 30 response to that motion, the debtors revealed that they had decided to demand the license-back provision in consultation with Lynrock, asserting that doing so was necessary to avoid jeopardizing the entire Chapter 11 settlement plan—and that the need to do so was only discovered after the Patent Purchase Agreement had been executed, which occurred before “plan discussions began in earnest”. Additionally, among various other arguments, the debtors contended that closing had not occurred because the debtors had not executed the patent assignment and provided related deliverables, all of which it characterized as necessary conditions precedent to closing.

Despite this clash, the parties disclosed to the court on January 8, 2025 that they had resolved the dispute. While some of the details of that resolution are redacted in the publicly available version, it is apparent that InterDigital did not succeed in at least some of its demands: An attached term sheet states that InterDigital agreed to offer a “fully paid-up, perpetual, irrevocable, non-exclusive, worldwide, non-sublicensable” license back to Edgio and its subsidiaries covering any product, service, or offering. The term sheet additionally provides a covenant not to sue and a release for claims of infringement against Edgio, its subsidiaries, customers, or resellers. Details withheld from the public version include the final license fee and various other terms under the category “License Agreement”.

With that resolution, the transfer of the Edgio patents to DRNC Holdings was executed on January 5 in two batches, one assignment comprising 321 US patent assets and recorded on January 30, and a second assignment comprising six US assets and recorded on January 9. The transactions did not appear in publicly available USPTO assignment data until early February.

While DRNC Holdings does not yet appear to have filed litigation over the assets that it obtained from Edgio, its acquisition of patents from a former content delivery provider is particularly notable due to a new campaign over streaming video services that InterDigital and certain other subsidiaries launched earlier this month—filing litigation against Disney in the US and Brazil and before Europe’s Unified Patent Court. For details on the US leg of that new campaign, see “InterDigital Hits Disney in the Central District of California” (February 2025).