Patent infringement claims resolved with $400 million settlement

The resolution of the deep disagreement between two California businesses came down to virtually the last minute. In the end, Arista Networks Inc agreed to pay $400 million to Cisco Systems Inc the day before a jury trial was scheduled to begin.

The settlement resolves lawsuits filed by San Jose’s Cisco alleging that Santa Clara’s Arista Networks copied its intellectual property.

The settlement also included an agreement by Arista to drop its lawsuit alleging that its rival engaged in anticompetitive conduct to defend its dominant share of the ethernet switch market.

The two companies issued a joint statement, saying that the settlement “demonstrates their commitment to the principles of IP protection.”

Arista was founded in 2004 by former Cisco engineers. The company has emerged as a real competitor to Cisco in the multibillion-dollar ethernet switch market. The switches are used in data centers.

Four years ago, Cisco filed suit against Arista, accusing the smaller firm of copying software that operates switching products. Arista denied the allegations and countered by claiming that Cisco was waging a smear campaign designed to protect its market share.

However, two years ago, the U.S. International Trade Commission ruled that Arista had indeed infringed three patents. It recommended a limited ban on the Arista products involved.

That same year, Reuters reports that Arista celebrated when a jury found it owed no damages on Cisco’s copyright infringement claims.

San Diego businesses that want to protect their IP should speak with an attorney experienced in favorable resolution of disputes over patents, copyrights, trademarks and trade secrets.