Summary
Cisco Systems, Inc. (CSCO) announced on August 6, 2018, a significant resolution to its long-standing litigation with Arista Networks, Inc. The agreement involves a one-time payment of $400 million from Arista to Cisco, which will be recognized in Cisco's first quarter fiscal 2019 financial results. This settlement marks a substantial positive development, alleviating legal uncertainties and providing a financial boost to Cisco. The agreement also establishes a framework for resolving future patent disputes through arbitration for new products or features for a period of three years. Both companies have agreed not to pursue patent or copyright infringement claims against each other's current market products for five years, with specific exceptions. While Arista will implement minor user interface changes, both parties will continue to pursue the appeal of a previous copyright infringement ruling, with potential for further adjustments based on the appeal's outcome.
Key Highlights
- 1Cisco and Arista Networks have entered into a binding Term Sheet to resolve substantially all outstanding litigation.
- 2Arista will pay Cisco $400 million, which will be recognized in Cisco's first quarter fiscal 2019 results.
- 3The agreement includes a clause for resolving future patent infringement claims on new products/features via arbitration for three years.
- 4Both companies have agreed not to sue each other for patent or copyright infringement on current market products for five years, with exceptions.
- 5Arista will implement limited changes to its product user interfaces.
- 6Cisco and Arista will continue to appeal the existing copyright infringement ruling.
- 7The resolution aims to reduce legal costs and uncertainties for both companies.