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Cisco ordered to pay $1.9B in Centripetal security patent suit

U.S. District Judge Henry Coke Morgan Jr. ruled that Cisco's infringement of Centripetal Network's patents was 'willful and egregious.' Cisco said it would appeal the ruling.

A federal judge has ordered Cisco to pay Centripetal Networks $1.9 billion, plus six years of royalty payments, for the "willful and egregious" infringement of its security patents. The ruling covered various Cisco products, including the popular Catalyst 9000 campus switches.

Federal Judge Henry Coke Morgan Jr. ruled this week that Cisco used in its firewalls, switches and routers technology protected by four Centripetal patents. The decision followed a 22-day federal court trial held over the Zoom video conferencing app, Bloomberg News reported. Morgan conducted the proceedings without a jury because of the COVID-19 pandemic.

Morgan said Cisco's use of the patented technology represented an "egregious case of willful misconduct beyond typical infringement." He also found that Cisco's defense lacked convincing evidence.

"Cisco did not advance any objectively reasonable defenses at trial," the judge said in his ruling.

Cisco did not advance any objectively reasonable defenses at trial.
U.S. District Judge Henry Coke Morgan Jr.

In a statement, Cisco said it would appeal the decision. "We are disappointed with the trial court's decision given the substantial evidence of non-infringement, invalidity and that Cisco's innovations predate the patents by many years."

The judgment

Morgan ordered Cisco to pay $1.9 billion in damages, plus a 10% royalty for the next three years on products containing the patented technology. The royalty fee would drop to 5% for the final three years.

The first three years of payments had a maximum of $300 million, while the second could not exceed $150 million. Therefore, Cisco could pay Centripetal as much as $2.35 billion, if the court's ruling survives the company's appeal.

"The Court's ruling affirms the opportunity for innovative companies like ours to develop solutions for the largest market opportunities," Centripetal CEO Steven Rogers said in a statement.

Centripetal used the patented technology in a security gateway branded RuleGate. The company used it in its CleanInternet service. Centripetal designed the products to proactively defend corporate networks from internet-based attacks.

Cisco and Centripetal met to discuss a possible partnership in 2015. According to the court, Centripetal shared its intellectual property under a non-disclosure agreement during the following months.

"The fact that Cisco released products with Centripetal's functionality within a year of these meetings goes beyond mere coincidence," the ruling said.

Cisco released the products on June 20, 2017, as the "network of the future." The new technology resulted in a "dramatic increase in sales, which Cisco touted in both technical and marketing documents," the court said.

According to the court, Cisco's infringing products included Catalyst 9000 switches, ASR and ISR routers, Stealthwatch Cloud security, Cognitive Threat Analytics, the Digital Network Architecture, the Identity Services Engine and Cisco firewalls.

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