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Cisco Fined Nearly $2 Billion As Trial By Zoom Concludes

Cisco Fined Nearly $2 Billion As Trial By Zoom Concludes
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A month-long ‘virtual’ trial held without a jury and conducted over Zoom, because of COVID-19 restrictions, has concluded with Cisco being found guilty of infringing a number of cybersecurity patents. The first virtual patent-infringement bench trial was held using Zoom after the judge rejected Cisco’s arguments that it posed a security threat and using Cisco Webex software would be the safer alternative.

The four patents in question are held by a Virginia-based cybersecurity company called Centripetal Networks and concern network protection technology. Technology that, at least as far as the patented parts involved in the case are concerned, was disclosed to Cisco under a non-disclosure agreement. The lawyer representing Centripetal, Paul Andre, told the court how the company had met with Cisco to talk about a partnership in 2016 and that Cisco “kept coming back and asking for more.”

District Judge Henry Morgan ruled that “The fact that Cisco released products with Centripetal’s functionality within a year of these meetings goes beyond mere coincidence.” Judge Morgan also stated that the ruling was “clear and not a close call.”

What’s more, the judge questioned Cisco’s challenges to the case in his judgment. While the first date of any alleged infringement was June 20, 2017, Judge Morgan said: “Virtually all of Cisco’s exhibits, technical documents, and demonstratives presented in its infringement and invalidity defense focused on its old technology, not on the current accused products.” He stated the “demonstratives of the functionality of Cisco’s accused products” weren’t based upon current technical documents; instead, they were based on “inaccurate animations produced post facto,” which served to confuse rather than inform the court.

In a statement, Andre said that the judgment means the court “rejected the primitive doctrine that might makes right,” and represented a “significant win for all small, innovative companies.”

For its part, in an emailed statement, a Cisco spokesperson said: “We are disappointed with the trial court’s decision given the substantial evidence of non-infringement, invalidity and that Cisco’s innovations predate the patents by many years. We look forward to the Federal Circuit’s review on appeal.”

Although the actual damages in the case were $755.8 million (£584 million), the judge multiplied this by a factor of 2.5 in order to reflect what he called Cisco’s willful and egregious conduct. Prejudgment interest of $13.7 million (£10.5 million) was also added to the amount, bringing the total to $1,903,239,287.50 (£1,469,157,987.00) payable in one lump sum. On top of this, Judge Morgan ordered Cisco to pay 10% royalties for three years on some products, reducing to 5% for the next three years. This equates to a mandated minimum of $252 million (£195 million) and a maximum of $450 million (£348 million) over the next six years.

 

This article was written by Davey Winder from Forbes and was legally licensed through the Industry Dive publisher network. Please direct all licensing questions to legal@industrydive.com.

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