Microsoft said it would pay VirnetX Holding some $200 million to settle patent-infringement claims against it.
The out-of-court deal comes after jury in Texas decided in March that Microsoft willfully infringed on two VirnetX patents relating to the use of secure communications software.
The move comes as Microsoft tries to head off the potentially more damaging patent claim against it filed by i4i over the use of custom XML in Office.
VirnetX was awarded $105.75 million in the Texas case, but also filed a second lawsuit, which became relevant after Microsoft released Windows 7 and Windows Server 2008 R2 which VirnetX felt also infringed its patents.
At that point Microsoft reached for its wallet. It offered $200 million to license VirnetX's patents and kill the proceedings.
As a result of the out-of-court settlement, both cases will now be dismissed.