Cisco to Appeal Record $1.9 Billion Judgment for Patent Infringement

A judge has ordered Cisco to pay $1.9 billion in a patent infringement case brought by Centripetal Networks. The total damage award of $2.6 billion-$3.2 billion is the largest of any U.S. patent case to date.

The United States District Judge for the Eastern District of Virginia in an opinion said that Cisco willfully infringed on four of the asserted five patents. Centripetal offers CleanINTERNET, a managed security service that is industry-agnostic and offers shielding and advanced threat detection. The technology uses dynamic intelligence on a mass scale. CleanINTERNET solutions target edge, enterprise and data centers.

Centripetal’s Steven Rogers

“The Court’s ruling affirms the opportunity for innovative companies like ours to develop solutions for the largest market opportunities,” said Steven Rogers, CEO of Centripetal Networks. “We’ve worked toward a paradigm shift in security through our development of the fundamental technologies behind CleanINTERNET. We believe these technologies are important for the country. Without the protection of a patent, an emerging company could never take on big important challenges like these. We are grateful to the court for affirming this.”

Here’s a breakdown of the ruling. For the four patent infringements, the damage award was nearly $756 million (enhanced 2.5 times for willful infringement). Add to that prejudgment interest of almost $14,000, which resulted in a total past damages award of more than $1.9 billion. Additionally, the Court awarded a running royalty of 10% on the apportioned sales of the accused products and their successors for a period of three years, followed by a second three-year term with a running royalty of 5% on such sales. This results in a total damages award of between $2.65 billion and approximately $3.25 billion.

Cisco Responds to Patent Infringement Ruling

Cisco responded to the judgment in the case.

“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. We look forward to the Federal Circuit’s review on appeal.”

According to an article in JDSupra, published in 2018, Centripetal’s 2018 complaint detailed Cisco’s infringement of ten patents granted between 2015 and 2017. The complaint targets Centripetal patents that Cisco used in a number of products, including routers and switches using IOS XE 16.6 networking software, Stealthwatch Cloud products and ASA with FirePower Services.

In Centripetal’s complaint, it also mentions Cisco’s 2014 acquisition of ThreatGrid. The vendor offered dynamic malware analysis and threat intelligence technology for on-premises and the cloud. Centripetal contends that through the ThreatGrid acquisition, Cisco gained increased exposure to its patented technology.

“On or around 2014, Centripetal partnered with ThreatGrid, a company which included threat intelligence technology which Centripetal integrated with their patented products that used some of the Asserted Patents,” the complaint stated.

These are just some of the in-depth complaints by Centripetal against Cisco.

Centripetal Expansion

In July 2017, Centripetal filed a complaint against Keysight Technologies and Ixia for patent infringements.

Cisco reported fourth-quarter revenue of $12.2 billion.

In May 2017, Gartner named Centripetal a “cool vendor” in security for technology and service providers. Cool vendors pioneer new directions and potential opportunities in the security market. At that time, Centripetal fully operationalized and automated threat intelligence through its Threat Intelligence Gateway. Today, Centripetal’s CleanINTERNET solution utilizes its patented Threat Intelligence Gateway.

The company launched in 2009 and sold its first product in 2015. Today, Centripetal is on a growth path, now selling its products outside of the U.S. The company has worldwide expansion plans, particularly for Europe and Asia.

“We will be looking at expanding there in the next 12 months or so,” Rogers wrote in a blog.