Multi-billion-dollar infringement case proves size doesn’t matter
Recent lawsuits have shown the high stakes involved when it comes to possible intellectual property (IP) infringements. More importantly, they’ve proved that smaller firms can fight their corner in these battles – even against some of the biggest companies in the world.
A box office example of this is the battle between Centripetal Networks and Cisco. Centripetal Networks sued Cisco and alleged it had infringed five of its patents. A federal court in the US agreed it had infringed four of the asserted patents and awarded damages of $1.9bn. It also awarded running royalties of 10% on sales of associated products for three years and then of 5% for a further three years.
The lawsuit relates to five patents that Centripetal Networks holds and believes Cisco has infringed. IP insurance enables companies in a similar situation to defend their IP where they believe it has been used without the proper licences or permissions.
The patents cover a range of cyber security technology designed to safeguard networks and prevent hackers from getting their hands on sensitive data.
Centripetal Networks alleges that its patented technology has been used within a range of products, switches and routers developed by Cisco and sold to customers.
Cisco turned to the US Federal Circuit Court of Appeals, which threw out the award because the judge’s wife in the original trial was found to have a financial interest in Cisco. The case has now been reassigned to another judge and will be re-tried.
The saga has already run for years. The initial case was tried in 2020 and completing the new trial will add more time to the clock. The dispute highlights just how long it takes to resolve these arguments and the associated problems that smaller firms have in finding the necessary management time and financial resource to stand their ground.
It also demonstrates the value that IP insurance offers in covering defence costs and in providing access to expertise that helps policyholders navigate the twists and turns of a complicated and fragmented dispute.
The parties in this particular case are worlds apart. Centripetal Networks employs fewer than 100 people and has annual revenues running to millions of dollars. Cisco employs more than 80,000 people and its annual turnover tops $50bn.
This type of corporate mismatch is not unusual in IP battles and insurance can help the smaller firm stay in the fight. No one wants to drag out the dispute, but it is important that a lack of resource does not deprive one party of bringing the matter to its conclusion.
While the dispute rages on, the case demonstrates some of the difficulties involved in bringing a lawsuit against a bigger rival. Even when both parties are of similar size it can be a drawn out and complicated process.
But if SMEs do not have access to the resources required to protect their IP, then it becomes very difficult for them to build a business centred on that IP and to expand their own operations.
Insurance gives them this resource. It ensures they can challenge potential infringements and see a dispute through to the end. To find out more about CFC’s IP policy, please email ip@cfc.com or visit our website.