CSCO Cisco Systems Inc

By Micah Maidenberg 

Arista Networks Inc. agreed to pay Cisco Systems Inc. $400 million as part of a settlement that resolves much of the litigation between the them.

The companies have been battling in court for several years over intellectual property and antitrust claims.

"Cisco and Arista have come to an agreement which resolves existing litigation and demonstrates their commitment to the principles of IP protection," the companies said in a joint statement Monday.

At the heart of the dispute was whether Arista infringed on Cisco copyrights related to programming commands used to configure Cisco networking hardware. Cisco claimed Arista could have developed its own commands, but Arista said those commands had become an industry standard used by many companies.

Heightening the drama is the fact that Arista CEO Jayshree Ullal is a former Cisco executive who was once close to John Chambers, the former top executive at San Jose-based Cisco.

In addition to the payment Santa Clara, Calif.-based Arista will make, the companies agreed to use arbitration, at least for the next three years, to resolve patent infringement issues connected to new products or related to new features in existing products.

For the next five years, the companies agreed that, with certain exceptions for source code claims, neither will file legal actions against the other for products that are currently on the market. Arista's filing described this as a "stand-down period" in its filing.

Cisco first sued Arista in federal court in December 2014 over the issue. About a year later, Arista claimed Cisco violated antitrust rules by allowing rivals to use the commands, locking them into using the technology. Then, according to Arista, Cisco claimed copyright protection.

With the settlement in place, Arista and Cisco will avoid litigating their differences before a jury. The companies plan to halt a trial related to the 2016 antitrust case Arista brought against Cisco, according to Arista's securities filing. That trial was scheduled to start Monday.

The companies added in their joint statement that they will continue to seek court review of an appeal connected to a patent case that Arista won in 2016. In that decision, a jury said that Arista didn't infringe on a Cisco patent and copyright related to the command-line technology.

In its securities filing, Arista said it also agreed to make certain changes to its command-line technology.

Shares of Arista rose 4.9% on Monday to $270.23 following the news. Cisco's stock was up almost 1% to $43.24.

Write to Micah Maidenberg at micah.maidenberg@wsj.com

(END) Dow Jones Newswires

August 06, 2018 14:15 ET (18:15 GMT)

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