When the on-going litigation is over (hopefully with multiple settlements and licensing) VirnetX will move into the next phase of its future business cycle. This is known as 4G Advanced Communications resulting from the work of the 3rd Generation Partnership Project (3GPP) and standards bodies such as the European Telecommunications Standards Institute (ETSI).

Because of the company’s silence due to the litigation, investors do not have much current information and insight into the future prospects for the business. This post is an attempt to describe in simple, understandable, and non-technical terms the expected licensing opportunities available to VirnetX upon implementation of release 10 of the ETSI/3GPP specifications. Please keep in mind that this is just my opinion and my interpretation from reading the specifications and it could be wrong. But I believe it is generally accurate enough to help us understand some of the future possibilities.

Background. The 3GPP was created in 1998 and unites [Six] international telecommunications standards bodies to produce the reports and specifications that define 3GPP technologies. These technologies are constantly evolving and therefore they must be defined in a series of releases. In these releases 3GPP produces technical specifications, to be transposed by relevant standardization bodies into appropriate deliverables (e.g., standards). Release 10 incorporates increased security requirements for the internet and mobile applications. ETSI and its USA counterpart The Alliance for Telecommunications Industry Solutions (ATIS) are the standards bodies working with 3GPP to produce the release 10 specifications applicable to VirnetX.

VirnetX declared its patents essential for seven of the release 10 specifications. These are TS 23.003, TS 32.583, TS 33.141, TS 33.203, TS 33.210, TS 33.222, and TS 33.328. In a separate post I will summarize my understanding of the specification paragraphs that pertain to VirnetX and list the related claims in each patent. In later posts I will discuss each specification in more detail.

IMS Architecture. Release 10 defines the Internet Protocol (IP) Multimedia Subsystem (IMS) architecture. So by understanding this architecture I believe we can get a reasonable insight into the future licensing opportunities available to VirnetX. The figure below is a simplified picture of the IMS architecture showing those elements of the IMS applicable to VirnetX licensing.

The actual figure 1 from TS 33.203 entitled IMS Security Architecture is attached for your information. It has many abbreviations for domain functions that require some technical insight to understand and may not be applicable to VirnetX so the simple figure below is used for this discussion.

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Secure Domains in the IP Multimedia Subsystem (IMS) Architecture

P-CSCF = Proxy Call Session Control Function

SEG = Security Gateway Servers

Client = User equipment, PC’s, tablets, cell phones, etc

IP = Internet Protocol   

Here is what this figure shows:

1.  .SGOV represents the secure domain that will be serving the U.S. government, with the exception of .SMIL and .SINT. The .SGOV domain may also include all 50 state governments. Obviously there are a large number of sub domains in .SGOV, for various federal agencies and for each state.

2.  .SCOM is the secure domain serving all of the companies and private entities in the world (assigned the .SCOM domain name) requiring some level of communications security. There are also a large number of sub domains in .SCOM as well.

3.  Internet represents the network and transport layers as defined by the various standardization bodies of the Open Systems Interconnection (OSI) model. This represents the worldwide network of nodes, routers and related equipment.

4.  It should be noted that the above figure represents two of many other domains including all of the standard conventional domains used today plus .SORG, .SNET,.SEDU, as well as .SMIL and .SINT (per the 211 patent).

5.  The figure shows the interface between the UE the P-CSCF and the SEG. The SEG is the security gateway server between the secure domain and the internet. The SEG is required for all communications to and from a secure domain. Communications within a secure domain do not pass through the SEG. There are other servers within the domain such as the Home Domain server and the edge router server that are not discussed here to keep the discussion simple.

6.  The interface from each secure domain to the IP multimedia networks is not shown in the above figure but it is a very important function. The interface is from computers in each secure domain called the Server Call Session Control Function (S-CSCF) and as of this writing it is not clear whether this server will have VirnetX licensed software. It must be noted that the IMS Architecture will allow for rich user-to-user and user-to-content communications (i.e. voice, video, data in any combination).

Domains. Most computer users are familiar with the idea of domains such as the .com, .net, and .org. Domains have a management structure with responsibilities such as the allocation of resources to implement changing internet standards, to provide for throughput and efficient flow of traffic, to assure compatibility, and others. When secure domains become operational the most important function of secure domain management will be to ensure that all domain users are properly authenticated for the level of security needed by each user. The secure domains will have functional capabilities (i.e. servers) dedicated to security. The IMS architecture provides for sub domains so that organizations such as the CIA would have one or more sub domains dedicated to their mission.

VirnetX licensing opportunities overview. The above figure shows the functions within each domain and the IMS that are expected to incorporate VitnetX technology. I will leave it to others to try to estimate quantities but obviously they will be very large numbers.

1.  User equipment (client) are the multimedia devices and computers that require some level of security. Each device authorized by domain authorities for secure communications would need a software module that has VirnetX licensed technology. Some estimates indicate that in the future there are potentially billions of UE devices worldwide and some percent of these will need secure communications.

2.  P-CSCF. The proxy call session control function is a server that is similar to the proxy DNS server described in VirnetX patents. This server will have VirnetX licensed software that will store the secure domain name addresses and resolve the addresses when a request is received from a secure UE. It appears that these would be in virtually every office or location that currently has a local area network. Because of the importance of the P-CSCF to the security function and its modest cost I would expect each server to have at least one backup. I would estimate that one P-CSCF would be needed for each 50-100 UE’s to assure traffic throughput.

3.  SEG. The SEG is a security gateway server. Every communication that goes to or from one secure domain to any other domain must go through an SEG. So in each secure domain there would be a very large number of these servers. The SEG will have VirnetX licensed software for authentication of UE access and to implement TARP. I would estimate the one SEG would be needed for each 1000 UE’s and again due to the critical mission each SEG would have a backup.

4.  Internet. The existing internet will have software to implement TARP. Routers throughout the worldwide internet will need VirnetX licensed software.

 Best regards to all