Arista Rises as Agency Agrees to Review Two Cisco Patents

Arista Networks Inc. rose the most since July after the U.S. Patent and Trademark Office on Tuesday agreed to consider the validity of two patents on router technology owned by arch rival Cisco Systems Inc.

Cisco sued last year seeking cash compensation for claims Arista built its business on stolen technology, while also asking a trade agency to block U.S. imports of Arista products. In retaliation, Arista asked the patent office to invalidate some of Cisco’s patents, saying the technologies aren’t new inventions.

By agreeing to review some aspects of the patents, the Patent Trial and Appeal Board made a preliminary finding that Arista is likely to win its challenge. The board declined to institute a review of a third Cisco patent, saying Arista hadn’t raised enough evidence to warrant one.

“Given the U.S. Patent and Trademark Office’s decisions not to institute a number of Arista’s validity challenges, Arista should cease their continued use of Cisco’s intellectual property,” said Robyn Blum, a Cisco spokeswoman.

Arista rose 5.4 percent to $67.38 at 4:20 p.m. in New York trading. Cisco was up 1.4 percent to $27.23.

Amanda Jaramillo, a spokeswoman for Arista, said the company had no comment.

Courtroom Race

The battle between the two competitors is being waged on three fronts -- the district court, U.S. International Trade Commission and at the patent office. That sets up a race to see which court or agency will make a final decision first.

Based on current schedules, it is likely to be the ITC -- the agency had a trial on one Cisco case in September, with a second planned for November. The ITC judges are scheduled to release their findings in January and April, with final decisions from the trade commission no later than August.

Cisco said that, in the short term, the decision to review the two patents “has zero impact on the three patents that the ITC staff attorney recently recommended a finding of infringement.”

The Patent Trial and Appeal Board has 12 months to make its decision on the two patents.

There also are petitions on other Cisco patents that are pending before the agency. A preliminary decision on Arista’s chances of victory in those cases is likely by next week, and the company challenge yet another patent on Tuesday.

Arista hasn’t challenged all of Cisco’s patents, said Matt Larson, a patent analyst with Bloomberg Intelligence.

“These targeted filings could give some insight into which patents Arista finds most problematic,” he said. Even if the challenges don’t ultimately succeed, they “could help Arista engineers design-around Cisco’s guarded technology.”

The cases are Arista Networks Inc. v. Cisco Systems Inc., IPR2015-00974, IPR2015-00975 and IPR2015-00978, all Patent Trial and Appeal Board, U.S. Patent and Trademark Office (Alexandria, Virginia).

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