Last Friday the world learned just how much it sucks to be caught with your hand in the cookie jar. A jury ruled that Cisco, the digital communications and hardware giant, was guilty of patent infringement and levied a fine of $70 million against the company. The Cisco fine does not include the additional $34,000 the company owes XpertUniverse for violating two of the company’s patents. If the award stands, it could take a serious chunk out of the earnings Cisco posts quarterly and could spell serious trouble for the world’s largest manufacturer of networking hardware and software solutions.
The charges stem from allegations that Cisco obtained patented technology in a fraudulent manner from manufacturer XpertUniverse. The company is a New York-Based call-center operator and says that while the two companies were working together in 2004, they severed ties in 2007. Shortly thereafter Cisco launched its “Expert on Demand” service which was essentially the same product that XpertUniverse was offering to consumers.
Details of the Cisco Ruling
The jury found that Cisco did indeed violate two of XpertUniverse’s intellectual properties including a “system and method for managing questions and answers using subject lists styles” and “semantic to non-semantic routing for locating a live expert.” These properties were covered under copyright laws by patent number 7366709 and 7499903.
The properties behind the patents were used after Cisco pilfered the technology after having distributed it for years while it worked with XpertUniverse. Cisco then used these technologies to improve its own service without acquiring approval from the system’s originator.
The light-fingering effectually side-stepped a non-disclosure agreement that Cisco had agreed to abide by when the two companies were still getting along.
The fine does sound extremely large for such a rather simple violation, Cisco made roughly $12 billion per quarter last year so paying it off would gobble up most of a year’s earnings. A representative from Cisco would appeal if the award was allowed to stand. The judge overseeing the case, the honorable Richard Andrews, has yet to make a final decision. The lawsuit has been in litigation since 2009 and was filed int he District Court of Delaware.