Cisco ordered to pay $1.89bn to Centripetal Networks

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Cisco was found guilty of infringing on four Centripetal patents.

Cisco Systems was ordered today to pay $1.89 billion for patent-infringement against cybersecurity tech firm Centripetal Networks. The case brought by Centripetal also accused Cisco of pushing Centripetal out of lucrative government contracts.

Acccording to Centripetal, Cisco infringed four patents, and a Virginia court on Monday agreed. The judge further declared the infringement was “willful and egregious,” and so he multiplied the original $756m owed by a factor of 2.5 to a total fine of $1,889,521,362.50. With interest, Cisco faces a total amount to be paid of $1,903,239,287.50.

The four Centripetal patents that Cisco infringed upon are: US 9,203,806, 9,560,176, 9,686,193, and 9,917,856.

Patents were developed with funding from the U.S. DHS

Centripetal had claimed that Cisco had infringed its patents relating to the company’s Threat Intelligence Gateway network protection system. The development of the technology had been partly funded by the U.S. Department of Homeland Security.

The company also revealed that Cisco breached their patents after both companies had discussed a partnership in 2017. “The fact that Cisco released products with Centripetal’s functionality within a year of these meetings goes beyond mere coincidence,” said District Judge Henry Morgan in his judgment.

He also noted that Cisco had “continually gathered information from Centripetal as if it intended to buy the technology from Centripetal.” The judge then said Cisco “appropriated the information gained in these meetings to learn about Centripetal’s patented functionality and embedded it into its own products.”

Cisco must pay ongoing royalty fees

The court also imposed a royalty of ten per cent of some of Cisco’s products for the next three years, and five per cent for three years after that. The judge ruled that the royalty must be at least $168m for the first three years, and at least $84m for the next three.

The initial $1.89 billion is “payable in a lump sum due on the judgment date,” the court said. Although the sums to be paid seem large, they only represent three months of profit for Cisco.

Tip: Cisco needs time to make Intent-Based Networking successful