Cisco is ordered to pay $1.9 billion in U.S. patent lawsuit, plans appeal

[October 06, 2020]  By Jonathan Stempel

(Reuters) - A U.S. judge on Monday ordered Cisco Systems Inc to pay $1.9 billion to a Virginia company that accused it of copying its cybersecurity patents.

A visitor uses a mobile phone in front of the Cisco booth at the Mobile World Congress in Barcelona, Spain, February 26, 2019. REUTERS/Rafael Marchante

U.S. District Judge Henry Morgan in Norfolk, Virginia, concluded after a monthlong non-jury trial that Cisco infringed four patents belonging to Centripetal Networks Inc, of Herndon, Virginia. He found no infringement of a fifth patent.

In a 167-page decision, Morgan said the case was "not a close call," citing inconsistencies in Cisco's evidence and that its own technical documents, many of which Centripetal itself introduced at trial, "proved Centripetal's case."

The payout includes an $1.89 billion award, reflecting $755.8 million in actual damages suffered by privately held Centripetal multiplied by 2.5 to reflect Cisco's "willful and egregious" conduct, plus prejudgment interest.

"Cisco did not advance any objectively reasonable defenses at trial" as to the four patents, Morgan wrote.

"The infringing functionality was added to their accused products post June 20, 2017, and resulted in a dramatic increase in sales which Cisco touted in both technical and marketing documents," he added.

Cisco said it was disappointed with the decision, "given the substantial evidence of non-infringement, invalidity and that Cisco’s innovations predate the patents by many years."

The San Jose, California-based company plans to appeal to the U.S. Federal Circuit Court of Appeals.

Cisco posted $11.2 billion of net income on $49.3 billion of revenue in its latest fiscal year.

Centripetal was founded in 2009 and focused on using threat intelligence software and firewall hardware to protect cyber networks.

“With this judgment, the court rejected the primitive doctrine that might makes right," Paul Andre, a lawyer for Centripetal, said in a statement. "This is a significant win for all small, innovative companies."

The case is Centripetal Networks Inc v Cisco Systems Inc, U.S. District Court, Eastern District of Virginia, No. 18-00094.

(Reporting by Jonathan Stempel in New York; Editing by Lisa Shumaker and Peter Cooney)

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