Cisco Can't Shield Customers From Patent Suits, Court Rules

netbuzz writes "A federal appeals court in California has upheld a lower court ruling that Cisco lacks the necessary standing to seek dismissal of patent infringement lawsuits against some of its biggest customers – wireless network providers and enterprises – being brought by TR Labs, a Canadian research consortium. The appeals court agreed with TR Labs' that its patent infringement claims are rightfully against the users of telecommunications equipment – be it made by Cisco, Juniper, Ciena or others – and not the manufacturers. 'In fact, all of the claims and all of the patents are directed at a communications network, not the particular switching nodes that are manufactured by Cisco and the other companies that are subject of our claims,' an attorney for TR Labs told the court. The court made no judgment relative to the patents themselves or the infringement claims."

Comments

Re:I don't understand

[hedwards]

The problem here is that the IP owners get to sue people with no knowledge or patents to fight back with. If Cisco gets sued, they have their own patents that they can use to fight back with. But, when a customer gets sued, they have to either settle, invalidate the patents or face losing the case.

This seems like bullshit to me as Cisco would be the ones actually infringing on the patents, assuming they are infringing, rather than the companies that bought Cisco equipment.

judges said Cisco products don't infringe

[raymorris]

The multiple levels of judges have agreed Cisco's gear does not infringe. It can be used to infringe, or used in ways that don't infringe.

According to the rulings, suing Cisco would be like suing Xerox for copyright infringement. Just because a copy machine CAN be used by an infringer doesn'tmake Xerox liable.

I do wonder if Cisco products are DESIGNED to be used in the way that plaintiff claims is infringement. Cisco seems to be suggesting that.

Re:judges said Cisco products don't infringe

[Jiro]

Xerox copiers would probably be used to infringe on copyrights, not patents, but ignoring that diffrerence, you can have two situations. In the first situation, the rights owner says that you are infringing by copying a particular book. In the second, the rights owner insists that the act of using a Xerox copier is infringing all by itself regardless of what you want to copy with it.

It would make sense that Xerox lacks standing in the first case, but it would make much less sense that Xerox lacks standing in the second.

According to the article, the company suing claims that Cisco's gear has substantial non-infringing uses and that it will not claim Cisco is a contributory infringer, which brings it a lot closer to the first case than to the second. It really would not make sense for Xerox to be able to intervene if some company is claiming that copying only one particular book is prohibited and other people could use Xerox copiers for other books without getting into trouble at all.

Furthermore, as other posts have pointed out, the custoimers that are being sued are organizations such as AT&T, Verizon, and Comcast, organizations that can easily afford lawyers to fight back, so this is not the situation where a big company sues some guy who uses a Cisco router in his home because he is poorer and makes an easier target than suing Cisco. Of course the Slashdot headline is misleading in this regard.

So there's really nothing to get upset about here.

The headline is misleading about the actual ruling

[tlambert]

The headline is misleading about the actual ruling; here it is:

"TR Labs’ concession that it is willing to grant Cisco an unqualified covenant not to sue, TR Labs’ concession that it has no basis for asserting direct or indirect infringement claims against Cisco, including the parties’ agreement that Cisco’s products have substantial non-infringing uses, and Cisco’s failure to identify any obligation to indemnify or defend its customers distinguish this action from others in which this Court has found declaratory judgment jurisdiction and support the district court’s finding that it lacked the same. We therefore affirm the district court ruling."
http://www.finnegan.com/files/Publication/810cf458-9bde-4f9b-a98f-d5293cafbaad/Presentation/PublicationAttachment/11d7000f-5c7b-47ae-ad7a-db503720b379/12-1687%208-29-13.pdf

So because Cisco has no contractual obligation to indemnify their customers, and TR Labs is willing to give an unqualified covenant not to sue Cisco for direct or indirect infringement by Cisco's customers, and it's in the outside realm of possibility that all customers are using Cisco products in a non-failover configuration (the subject of the patents is failover) because they're stupid and fail to follow best common industry practice, Cisco is not a party to the suits against the customers.

Cisco could have taken this bullet if it had been willing to indemnify their customers via an amended terms and conditions on the Cisco OS software on the devices; it chose not to do so.

Tactical Change

[Anonymous Coward]

This decision is a 180 degree turn in logic from other court decisions on IP infringement. One example: file sharing sites being found guilty of providing platforms for illegal file sharing. But that's because RIAA and MPAA were in those cases specifically suing the creators of the platform, while at the same time pursuing other tactics against the users (file sharing individuals like Jammie Thomas).

TR Labs doesn't want to take on Cisco because Cisco is their cash cow. As long as Cisco keeps on selling products that infringe, TR Labs can sue customers that build networks offering services on those products. TR has no obvious business need to shut down Cisco. And TR probably considers their patents at risk if they sue Cisco directly, or they would have sued Cisco for very large amounts of money already. If Cisco thought their products infringed, they would certainly have spent some time negotiating and perhaps worked out a license. This route is lower risk for TR's alleged IP.