Arista Settlement

Arista and Cisco announced Aug. 6 that the San Jose, Calif.-based Arista Networks, led by Jayshree Ullal (above), will pay Cisco $400 million to resolve a court case. (Twitter/Arista Networks photo)

Arista Networks Inc., led by Indian American executive Jayshree Ullal, has agreed to pay $400 million to Cisco Systems Inc. to resolve a U.S. court fight between the two network equipment makers, Arista said in a regulatory filing Aug. 6, the day a jury trial in the dispute was scheduled to begin, according to a Reuters report.

The settlement resolved U.S. lawsuits filed by Cisco alleging Arista copied its intellectual property.

The deal also called for Arista to drop a lawsuit alleging Cisco engaged in anticompetitive conduct to preserve its dominant share of the ethernet switch market. The jury trial in that case was to have started Aug. 6 in San Jose, Calif., the report said. 

The companies said in a joint statement that the settlement “demonstrates their commitment to the principles of IP protection.” 

Founded in 2004 by former Cisco engineers, Arista has emerged as a rival to Cisco in the multibillion-dollar market for ethernet switches used in data centers, it said.

Cisco sued Arista in 2014, alleging it brazenly copied software that runs switching products and other technology protected by patents and copyrights. Arista has denied the allegations and accused Cisco of a smear campaign intended to stifle competition, the report added. 

The U.S. International Trade Commission ruled in 2016 that Arista infringed three patents and recommended a limited ban on Arista’s products that infringe the patents. 

Arista said that in an effort to comply with the ITC’s ruling it redesigned its technology to remove elements found to infringe Cisco’s patents, Reuters added.

Arista scored a major victory of its own in 2016, when a U.S. jury said it owed no damages over Cisco’s claims of copyright infringement. 

The settlement came shortly before a trial in a 2016 antitrust lawsuit filed by Arista. It alleged Cisco permitted rivals to use its interface technology and then later, after they were locked into using it, claimed copyright protection on it, the publication said. 

Cisco denied the allegations in court filings, saying it never encouraged Arista to adopt its technology and that it acted reasonably in suing for copyright infringement. 

The companies said in the joint statement that “with limited exceptions, no new litigation will be brought over patents or copyrights related to existing products, for five years.” 

The settlement does not resolve Cisco’s appeal of the 2016 verdict that Arista was not liable for damages under U.S. copyright law. A federal appeals court heard arguments relating to those claims in June and likely will issue a ruling later this year, according to the report.

Arista, a company led by former Ernst & Young U.S. Entrepreneur of the Year and former manager at Cisco Jayshree Ullal, also recently announced that it has acquired Mojo Networks, the inventor of cognitive WiFi and a leader in cloud-managed wireless networking. The deal is expected to close in the third quarter.

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