The patent infringement dispute between network technology companies Cisco Systems (CSCO) and Arista Networks (ANET) took a turn for the better, with the companies reaching an amicable settlement Monday when the trial in the case was scheduled to commence.
As per the agreement, Cisco will drop its lawsuits alleging the violation of major intellectual property rights by Arista. In return, Arista will pay $400 million to Cisco as final settlement and withdraw its case accusing the later of engaging in anticompetitive activities to stay at the top in the Ethernet switch market. The deal also requires the companies to follow a three-year ‘dispute resolution process’ for allegations over new/modified features in their products.
Cisco in a complaint filed in the court about four years ago had claimed that Arista – a direct competitor in the network equipment market that was founded by former Cisco employees – blatantly infringed upon copyright protected technology including patented software that drives switching products.
As per the agreement, Cisco will drop its lawsuits alleging violation of major intellectual property rights by Arista
While dismissing the allegations as baseless, Arista accused Cisco of unleashing propaganda aimed at damaging its reputation and thereby escaping competition. But, Cisco refuted the claims. Meanwhile, issuing an order in favor of Cisco a couple of years ago, the International Trade Commission recommended restrictions on the sale of three infringing Arista products. Following the order, Arista made modifications to the said products so that they do not breach the copyright anymore.
In the same year, a separate order came as a setback to Cisco, in which the court dismissed its patent breach claims and relived Arista of any potential compensation.
Meanwhile, Cisco has announced its decision to appeal the court order acquitting Arista in a case related to alleged infringement of its copyrighted command line interface that is used for managing networking equipment.
Over the past twelve months, Cisco shares gained about 38% before ending the last trading session slightly higher. The stock gained nearly 2% in the regular trading session Monday. Meanwhile, Arista stock traded up 5% as investors responded more enthusiastically to the report.