Cisco today filed patent and copyright lawsuits charging Arista with "repeated and pervasive copying of key inventions in Cisco products."
The lawsuits charge that Arista Networks Inc. knowingly incorporates features in its products violating Cisco Systems Inc. (Nasdaq: CSCO) intellectual property rights. Arista markets those features to its customers, and brags about the copying to win investors, said Mark Chandler, Cisco senior VP, general counsel and secretary, and chief compliance officer, in a post on the Cisco blog this morning.
Chandler says Arista deliberately included 12 "discrete and important Cisco features covered by 14 different US patents."
"All of these features are being used by Cisco currently and in products we ship to our customers. None of the implementations are incorporated in industry standards," Chandler says. The features were patented by Cisco employees who went to Arista, or who worked with executives who are now at Arista.
Responding to the lawsuits, an Arista spokeswoman said in email:
We just became aware of the lawsuit and have not had an opportunity to evaluate the claims in detail. We will certainly be doing so in the coming days. While we have respect for Cisco as a fierce competitor and the dominant player in the market, we are disappointed that they have to resort to litigation rather than simply compete with us in products.
The spokeswoman adds a "personal statement" from Jayshree Ullal, president and CEO of Arista: "I am disappointed at Cisco's tactics. Its not the Cisco I knew." Ullal was formerly a senior vice president at Cisco.
11 Infringing Features
Chandler names 11 Arista features that allegedly infringe on Cisco's patents, including the System Database ("SysDB"), Zero-Touch Provisioning ("ZTP"), and Cisco's implementation of the generic command line interface and CLI command data translation.
"Arista’s copying was a strategy, not an accident, and this is illustrated by the action we brought today regarding copyrighted materials. Entire sections of our copyrighted user manuals, complete with grammatical errors, are included in Arista’s documentation," Chandler says.
Arista also copied complex syntax from Cisco's command line interface -- "over 500 of our multi-word command line expressions." And Arista boasted that the copying made Arista's products easy to use for engineers with Cisco training, Chandler says.
While simple, single-word commands (“Copy”, “Paste”, “Delete”, for example) may not be protectable under copyright, unique multi-word commands like "aaa group server radius," "dot1x max-reauth-req" and "clear ip igmp group" are not self-evident.
By comparison, competitors HP, Brocade, Alcatel-Lucent, Juniper Networks and Extreme "each only have a small fraction of overlapping CLI commands," Chandler says, adding, "In the case of Juniper Junos, the overlap is less than 30 multi-word commands. These formidable competitors have innovated on their own, rather than copy, to create value and interoperability for their customers," Chandler says.
Chandler enumerates quotes from Fortune, Network World, and Arista's marketing materials where Arista executives brag about their ties to Cisco.
Chandler says Cisco doesn't stand in the way of ex-employees competing with Cisco, and supports California laws that block non-compete agreements. "Dozens of Cisco competitors, many founded by former Cisco employees, have sprung up through the years, and we’ve never viewed that by itself as a cause for litigation," Chandler says.
Chandler also distinguishes Cisco's lawsuits against Arista from so-called "patent trolling" suits. Cisco isn't "suing Arista in some distant jurisdiction over obscure patents covering features we don’t currently use," Chandler says, adding:
Instead, today we’re bringing our actions right here in the Federal District Court for the Northern District of California, where Arista is also located, over patents that cover Cisco’s proprietary implementation of key features in products we are shipping today.
News in recent years has focused on abuses of the patent system – against which we continue to fight hard -- by those whose business model consists of buying weak patents, stretching the interpretation as far as possible, resisting reexamination of those patents and leveraging litigation uncertainty to extract settlements. Our action today speaks instead to why our patent system exists. Our goal is to stop infringement by a competitor of features that are in products that we are shipping today.
Why This Matters
The Cisco lawsuit represents a major threat to Arista, jeopardizing the company's core products.
Conversely, the lawsuit is also perverse recognition for Arista, which has successfully competed against Cisco by laser-focusing on the lucrative data center switching market segment. Arista's customers include hypercloud providers such as Microsoft and Facebook, along with the very largest enterprise networks. This lawsuit is a sign that Cisco recognizes Arista as a real threat. (See Arista's Q3: Smooth Not Lumpy With the Cloud Titans and Arista Stock Jumps On Meteoric Growth).)
Arista traded at $68.24 today, down 7.19%. Cisco was also down slightly, trading at $27.5, down 0.97%.
Arista is also being sued by cofounder David Cheriton and his company, OptumSoft, over a compiler used in Arista's EOS switch software that Arista licensed royalty-free from OptumSoft. Arista is countersuing and recently replaced its counsel in the OptumSoft case. (See Arista Faces Legal Challenge as It Files for $200M IPO .)