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Protecting Innovation: Presidential Review Period Expires in ‘945 Investigation

- July 5, 2017 - 0 Comments

We learned this morning that the U.S. Trade Representative and the White House have rejected Arista’s “trade policy” pleas, and refused to stop the ITC’s limited exclusion and cease and desist orders from going into effect. The orders were issued in response to Arista’s infringement of two Cisco patents. That means that effective today, Arista is barred from importing infringing products and components to manufacture those products (or have others do so), and they are barred from selling infringing products made from imported components. Arista has indicated that in order to have continued marketplace sales, they have stockpiled components or infringing products.

Arista is now in an interesting position: while the U.S. Patent and Trademark Office (PTO) has found the two patents in this current case invalid, the ITC – whose orders they are apparently violating today if sales continue – has found the patents valid and infringed. The ITC rejected Arista’s validity challenge to one of the patents because its validity had been sworn to by Arista’s founder and current board chair, Andreas Bechtolsheim, who invented the technology when he was a Cisco executive.  The other patent also covers technology invented at Cisco that Arista knowingly used in its products.

Arista has asked the ITC to suspend its orders until the Federal Circuit Court of Appeals can resolve the inconsistency.  For our part, we don’t think a suspension is warranted.  First, Arista has evinced what the ITC referred to as “a corporate culture of copying”, and these patents represent only a part of the technology Arista copied from Cisco.  No special sympathy should point in their direction in “close cases”, which is how the ITC’s staff characterized this case. Second, the conflict is largely due to Arista’s own efforts to delay matters; they filed the challenge at the PTO on the last possible day, a year after we first brought the legal action over their infringement.  And finally, Arista insisted the PTO do the review partly blindfolded, not allowing the PTO access to information that the ITC had. That information could have informed the PTO as to the difficulties Arista had in developing other solutions that don’t copy, undermining any claim that the Cisco patents were “obvious” in light of prior inventions.

Even if the ITC refuses to suspend its orders, Arista will still have the right to seek a stay from the Federal Circuit. And that is where the issue should be decided, not by the ITC, which would have to undermine its own earlier findings.  If a suspension is issued, however, we will seek reversal by the Federal Circuit.

The right solution, as we’ve emphasized from the beginning, is for Arista to stop using technology they copied from Cisco.

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