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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."
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.
Because Cisco has patents and a fleet of IP attorneys. In other words, the patent holders are looking to sue people that can't fight back.
Cisco may not have standing in court, but that shouldn’t prevent them from contributing to their customers’ defense. Lend them some high-priced in-house counsel.
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.
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.
The patents are about automatic failover when network nodes or spans break. The earlier patents are about having spare nodes and spans and deciding which to use when some part of the network fails (eg. having a node which broadcasts "who can help?" and available nodes broadcast back "i can help!" and a single node decides which available node to use). The later patents are about turning on and off routes between nodes to reconfigure the network, usually into some sort of mesh network.
I'm not a network engineer so it's hard for me to judge, but the earlier patents seem trivial to me especially since they're from the late 1990s. The latter patents might have some merit - the idea of changing the network to a mesh is interesting, but my gut feeling is they're mostly solutions that any decent engineer would come up with after a bit of head scratching.
Graham
In cases like this, they kinda have to, or else no-one will buy Cisco again, or the customer who just had to settle will then sue Cisco for all their losses.
Waiting for an amusing sig.
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.