Arista to pay Cisco $400M to resolve long-standing patent case

Cisco and Arista came to terms on a long-standing patent lawsuit. (Pixabay)

It wasn't exactly the Hatfields versus the McCoys, but Arista and Cisco reached an agreement on their long-standing court battle over patent infringement and antitrust claims.

In a filing today with the Securities and Exchange Commission, Arista agreed to pay Cisco $400 million in order to dismiss all pending district court and patent litigation. The settlement ended U.S. lawsuits filed by Cisco alleging that Arista copied its intellectual property.

Today's agreement also called for Arista to drop a lawsuit alleging Cisco engaged in anticompetitive conduct to keep its dominant market share of the Ethernet switch market. A jury trial in that case was set to start today in San Jose, California, according to a story by Reuters.

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“Cisco and Arista have come to an agreement which resolves existing litigation and demonstrates their commitment to the principles of IP protection," according to a joint statement by Cisco and Arista. "They have agreed that, with limited exceptions, no new litigation will be brought over patents or copyrights related to existing products, for five years. In addition, for three years, they will use an arbitration process to address any patent issues regarding new products. As part of this agreement, Arista will be making a $400 million payment to Cisco, is committed to maintaining the product modifications it made as a result of previous rulings, and will be making limited changes to further differentiate its user interfaces from Cisco’s."

RELATED: Cisco sees Q1 2017 declines in Ethernet market, while Arista and Juniper jump, says IDC

The patent battle between the two networking giants started in 2014 when Cisco alleged that Arista, which was founded by former Cisco engineers, infringed on its patents and inventions. Cisco maintained that the patents in question were invented by its employees that later became Arista executives.

In addition to the payment, Arista said it would make modifications to its command line interface (CLI), which was a key sticking point back in 2014. Arista said that CLI was an industry standard and not the intellectual property of Cisco and that Cisco had made "no statements that asserted intellectual property or other property rights in the Cisco CLI itself" in a July 30 complaint by Arista.  Cisco countered by saying

Despite the patent settlement, Cisco and Arista will continue to do battle in a lawsuit in an appellate court over legal protections for user interfaces.

As a result of today's agreement, Arista said it would record a charge of $405 million to its operating expenses, which resulted in a revised GAAP net loss for the quarter of $155.3 million.