Cisco Systems, Inc. (NASDAQ:CSCO) is to pay $1.9 billion to settle patent infringement claims. District Judge Henry Morgan has ruled that the networking giant did indeed infringe Centripetal Networks Inc. four patents touching on cybersecurity technologies.
Cisco Patent Infringement
The Virginia Company has sued the tech giant for releasing products that included its technology, a move that caused it to miss out on big government contracts. Cisco allegedly copied Centripetal Networks technologies and integrated the inventions into its networks.
The copying occurred as soon as centripetal officials held a meeting and presentations with Cisco officials. According to court filings, Cisco released products with centripetal functionalities within a year of the meetings taking place.
In court filings, Centripetal also alleges that its sales had been doubling each year from 2015 until its officials held a meeting with Cisco. The two were reportedly close to a partnership, but Cisco pulled out of a deal at the last minute.
In his ruling, the judge ordered Cisco to pay Centripetal $755.8 million for past use of the inventions in questions. The payout is two-timed higher after the judge found the infringement was willful and egregious. According to the Judge, the introduction of Centripetal's security features resulted in a dramatic increase in Cisco sales touted in technical and marketing documents.
The judge has also ordered the tech giant to pay 10% in royalty on sales of some of the products over the next three years. After three years, the royalty payment is to shrink to 5% for an additional three years.
Cisco Appeal
While it is a big win for Centripetal after the month-long trial, it is a big blow for Cisco. The Virginia based company says it developed the inventions in question following a grant from the Department of Homeland security.
Cisco has confirmed it intends to appeal the ruling, despite the $1.9 billion damage award being less than three months of its profit. In 2019 the company reported $11.04 billion in net profit with its cash and cash equivalents standing at $29.4 billion as of August this year. The company says it will appeal the District Court ruling in a U.S Court of appeals for the Federal Circuit.
