Don't Fear the Finjan

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Aren't you people tired of seeing me writing about Secure Computing (Nasdaq: SCUR)?

After commenting on a Deutsche Securities downgrade on Monday, and then noting lower first-quarter guidance on Tuesday, I'm still getting email about the potential impact of a patent ruling against the company. You ask, I answer.

Let's recount the specifics, shall we? On March 13, Secure revealed that Finjan Software had won a patent judgment against it. Like Websense (Nasdaq: WBSN) and Trend Micro, Finjan specializes in securing you against digital threats on the World Wide Web.

Finjan, claiming that it invented the technology needed to proactively filter and defend against these sorts of dangers, filed suit in 2006. That technology, Finjan says, had made its way into Secure's Webwasher and SmartFilter products. A jury agreed, and Finjan has asked the court to bar Secure from selling those products.

But the story doesn't end there. Secure Computing plans to appeal, and it's in the midst of its own claim against Finjan for patent violations. Not much is likely to occur in either case until after Secure replaces General Counsel Mary Budge, who resigned last week.

Secure says there's no connection between the Finjan setback and Budge's leaving. But it's not an encouraging sign, is it? As an investor, I feel compelled to prepare for the worst, which is ... a penny or two in lost earnings a couple of years from now.

Yes, that's all. And here's why. First, legal cases can take years to resolve, and there's no reason to believe that won't happen here. And remember: Executives said in Tuesday's call with analysts that the Finjan ruling had no impact on first-quarter results.

Second, Web gateway security isn't the domain of Cisco (Nasdaq: CSCO), Checkpoint (NYSE: CKP), Symantec (Nasdaq: SYMC), or any of Secure's larger competitors. Instead, it's home to roughly 8%-12% of the business on an ongoing basis, as company officials confirmed after the ruling.

So, although I'd never undersell the impact of a potential patent defeat, there appears to be little risk to the overall business -- and none whatsoever to Secure's bread-and-butter firewall products or its unique TrustedSource threat-monitoring technology.

Don't fear the Finjan, Fool. Not before this fight reaches the late rounds.