AuthenTec (Nasdaq: AUTH), the world’s leading provider of fingerprint sensors and solutions, announced that on May 5th, 2008 the U.S. District Court of Northern California issued an order in favor of AuthenTec, ruling that its products do not infringe either of the two patents asserted in a lawsuit by Atmel Corporation (Nasdaq: ATML).

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For those who have been worried or nervous about this case, it appears, at least for the time being, that AuthenTec has fought off another attacker in the fierce and often contentious fingerprint sensor market.

Is It Finally Over?

The summary judgment concludes that none of AuthenTec’s products infringe any of the patent claims as alleged in a lawsuit filed by Atmel in March 2006.

The court also awarded AuthenTec reimbursement of their fees associated with fighting the lawsuit.

“From the inception of the lawsuit, we were confident our products did not infringe any of the patent claims alleged by Atmel, and we are very pleased that the court has affirmed our position through the summary judgment,” said AuthenTec Vice President & General Counsel Frederick Jorgensen. “We believe that our technology and intellectual property are the foundation of our market leadership, and we will defend these assets as necessary.”

So the question then becomes, does this mean the lawsuit and all related claims are finished and we never have to hear from Atmel again?

In a word, no.

Atmel can always file an appeal, although to do so would again put the burden of proof on them, and drag this case through the mud for months or years to come.

I don’t think that Atmel wants to do that, especially in light of the fact that they lost this summary judgment, but that being said, if Atmel feels that they have a strong case, and want to appeal, there is nothing stopping them from doing so.

Bottom Line

This is great news for AuthenTec, and is one less thing to worry about and distract management from their duties.

The fact that Atmel lost this judgment makes it much less likely that they will appeal, and even more unlikely that they would appeal and win.

AuthenTec still has one more case that is pending where they went on the offensive (filing a patent infringement suit against privately held Atrua Technologies), so it’s basically one down, and one to go.

This pending case is not expected to cost too much money (about $500k for the remainder of the year), so hopefully management sticks to the gameplan, and continues to execute as they have been doing.

Looks like everything is still a go for AuthenTec.

• Click here to read my complete AuthenTec research report and buy recommendation

*Variables You Should Know About AuthenTec (Nasdaq: AUTH)
Current Recommendation:	BUY
The Company:	AuthenTec, Inc., is a fabless mixed-signal semiconductor company that provides fingerprint authentication sensors and solutions to the high-volume personal computer (PC), wireless device, and access control markets.
Why Buy Now:	Proprietary and Patented Technology Low-Cost Advantage Huge Growth In an Expanding and Rapidly Developing Market Strong Relationships With Leading Global PC and Wireless Device Manufacturers Addressable market of over 1 Billion units per year New Company on the Precipice of Fundamental Breakout High Margin Business Multiple Revenue Streams
Market Cap:	$380.00
Revenue (TTM):	$58.60
Cash/Debt:	$67 / $0
Current Price:	$13.00
Risk Rating (?):	7.5 (Moderate-High)
Position Size (?):	1/4 (12-17-07), 1/4 (1-17-08), 1/4 (1-23-08)
Buy Around Price (?):	$13.50 (12-17-07), $13.25 (1-17-08), $12.00 (1-23-08)

*As of 5-15-08. Except share price, all values in millions.