Cisco Systems (NASDAQ:CSCO) and Arista Networks (NYSE:ANET) have reached an agreement that will end their legal battle of Arista’s alleged infringement of Cisco patents. Arista will pay Cisco $400 million as part of the deal and further tweak its user interfaces to differentiate them from Cisco’s. The two companies reached the agreement the day before a jury trial related to the matter was scheduled to begin.
Cisco sued Arista, which was founded by former Cisco employees, in 2014 for allegedly copying Cisco software for its Ethernet switches. The U.S. International Trade Commission (ITC) sided with Cisco in 2016 when it ruled that Arista had infringed three patents. The commission recommended a limited ban on Arista’s products covered by the ruling. Arista modified its products in response to the ITC ruling. Meanwhile, later in 2016, a jury decided that Arista owned Cisco no damages for copyright infringement.
Meanwhile, Arista filed a suit against Cisco, alleging its adversary engaged in anti-competitive behavior by allowing rivals to use its software, then slapping them with patent infringement claims. A trial on that score was the one scheduled to begin the day before the two sides reached the current settlement.
The two companies issued a joint statement on the agreement:
“Cisco and Arista have come to an agreement which resolves existing litigation and demonstrates their commitment to the principles of IP protection. They have agreed that, with limited exceptions, no new litigation will be brought over patents or copyrights related to existing products, for five years. In addition, for three years, they will use an arbitration process to address any patent issues regarding new products. As part of this agreement, Arista will be making a $400 million payment to Cisco, is committed to maintaining the product modifications it made as a result of previous rulings, and will be making limited changes to further differentiate its user interfaces from Cisco’s. Arista and Cisco will continue to seek appellate court review of the scènes à faire verdict in the earlier trial regarding legal protection for user interfaces.”
The last statement refers to Cisco’s appeal of the 2016 jury finding in Arista’s favor.
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