Summary
Arista Networks, Inc. (ANET) announced on July 20, 2017, that the International Trade Commission (ITC) has denied its motions to suspend the limited exclusion and cease and desist orders. These orders, issued in connection with a patent infringement investigation initiated by Cisco Systems, Inc., effectively bar Arista from importing and selling certain Ethernet switching products in the United States. While Arista had previously seen four of six patents dropped and its infringing products subject to a temporary bond during Presidential review, the ITC Orders are now in effect. Arista intends to appeal the ITC's decision to the U.S. Court of Appeals for the Federal Circuit and is concurrently working on redesigning its products to comply with the orders. The company acknowledges significant risks associated with these redesign efforts, including potential cost overruns, delays in customer qualification, and the possibility of not obtaining necessary regulatory approvals for modified products. Failure to effectively navigate these challenges could materially impact Arista's business, operations, and financial condition.
Key Highlights
- 1ITC denied Arista's motions to suspend the limited exclusion and cease and desist orders.
- 2The ITC Orders, related to a Cisco patent infringement complaint, are now in effect, prohibiting importation and sale of certain Arista Ethernet switching products in the U.S.
- 3Arista was found to infringe two out of six patents initially alleged by Cisco.
- 4Arista plans to appeal the ITC's decision to the U.S. Court of Appeals for the Federal Circuit and seek a stay of the orders.
- 5The company is actively redesigning its products to comply with the ITC Orders.
- 6Significant risks exist regarding the timely and successful redesign, qualification, and regulatory approval of modified products.
- 7Failure to address the ITC Orders could materially and adversely affect Arista's business, operations, and financial health.