Cisco expected to pay $1.9B in security-patent trial defeat
Cisco Systems was told to pay $1.9 billion after losing a trial brought by a Virginia company that claimed the networking giant copied patented cybersecurity features and shut the smaller company out of government contracts.
Cisco infringed four patents owned by Centripetal Networks Inc., District Judge Henry Morgan in Norfolk ruled. The judge heard the month-long trial over video conference in June after canceling the use of a jury because of the coronavirus pandemic.
Cisco said it would appeal the decision. Centripetal Networks, based in Herndon, Virginia, said it developed a network protection system, funded in part by a grant from the Department of Homeland Security, only to see Cisco integrate the inventions into its own networks after meetings and presentations by Centripetal officials.
“The fact that Cisco released products with Centripetal’s functionality within a year of these meetings goes beyond mere coincidence,” Morgan said.
The judge said Centripetal was owed $755.8 million for past use of the inventions, which he increased by 2½ times after finding that Cisco’s infringement was “willful and egregious.” He also ordered that Cisco pay a 10% royalty on sales of some of its products for the next three years, and then 5% in royalties for three years after that.
Jonathan Rogers, Centripetal’s chief operating officer, said the company was “thrilled” with the
ruling.
“It’s been a long time coming and was very hard fought,” he said in an interview.
The total damage award accounts for less than three months of profit for Cisco. The company reported net income of more than $11.04 billion for calendar year 2019. It’s also one of the most cash-rich companies in technology. In August it reported cash, cash equivalents and investments of $29.4 billion.
Cisco said its cybersecurity features were developed long before Centripetal was founded a decade ago. San Jose, Californiabased Cisco said Centripetal hasn’t been successful in getting government and university contracts because its ideas were too complicated.
Cisco said it will appeal.