Packet inspection/traffic management

Brocade Wins Judgment Against A10

A jury awarded Brocade Communications Systems Inc. (Nasdaq: BRCD) $112 million Monday night against startup A10 Networks Inc. and its founder Lee Chen.

The jury said A10's AX line of load balancers uses code copied from Brocade's ServerIron product line. The jury also found A10 guilty of unfair competition for recruiting an engineer to work at Foundry Networks and A10 at the same time, according to Brocade's press release. (Foundry got acquired by Brocade in 2008.)

Brocade also says it won damages for three counts of patent infringement (out of nine patent-infringement claims made in the original court filing) and four counts of trade-secret misappropriation.

A10, however, points out that the fines for most transgressions were minimal: $1 for the trade-secret and employee-recruiting claims, and less than $2 million in patent damages, as the jury deemed the infringement unwillful. It's the copyright infringement penalty, at $60 million, that appears to account for most of the damages, based on numbers in an A10 press release issued Monday.

(A10's release doesn't account for all $112 million that Brocade claims to have been awarded.)

A10 adds that it removed the 145 lines of infringing code last year; the code consisted of a publicly available algorithm, A10 says.

The jury didn't side with Brocade on everything though. The suit originally alleged breach of contract for three A10 engineers as well as Chen, but the jury seems to have awarded damages only against Chen and A10.

Brocade also wanted the court to block the sale of A10's AX line; it's unclear whether that will be granted.

Why this matters
While Brocade is certainly happy about the decision, the case has a bigger effect on A10, a younger company with a lot to lose if it's prevented from selling the AX series. A10's attempt to counter-sue Brocade got dismissed by the court, a Brocade spokesman says.

A10 presumably will appeal the decision (Light Reading is working on getting confirmation of that), so the case could still linger for a while.

A10 was also sued by F5 Networks Inc. (Nasdaq: FFIV) in 2010 for patent infringement, but the Brocade case got into some deeper accusations, such as the copying of code.

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— Craig Matsumoto, Managing Editor, Light Reading

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