Cisco Seen As Trying To 'Slow Down Arista Anyway They Can' With Patent Lawsuits
Partners say Cisco's end game with its patent lawsuits against Arista Networks is simply to slow the fast-growing networking company and stunt any innovation efforts from competitors.
"Cisco's goal is to try to slow down Arista and competitors any way they can," said Chris Becerra, president and CEO of Terrapin Systems, a Morgan Hill, Calif.-based Arista partner. "If they don't have the technology to beat them out there, they're going to try to slow them down any way possible."
Last week, the San Jose, Calif.-based network giant won three of five patent infringement suits against Santa Clara, Calif.-based Arista dealing with its networking switches. The International Trade Commission recommended a ban on Arista product imports containing the infringing technology. Additionally, the ITC also ruled earlier this year that Arista infringed on several other Cisco patents pertaining to its private VLANS, system database and externally managing router configuration with a centralized database -- recommending a similar ban on Arista imports.
Arista partners say the patent lawsuits, initially filed in December 2014, are a reflection of Cisco's trying to impede competitors.
"When you look at switching, Cisco isn't gaining double-digit [revenue] gains or anywhere even close to that and haven't for awhile now," said a top executive from a solution provider that partners with Arista, who didn't wish to be named. "Now look at what Arista is doing … massive, massive growth each year, and they're Cisco's main competitor here, and so lawsuits make investors think twice about investing or might hold off a customer here or there from buying [Arista]."
For its recent first fiscal quarter, Arista Networks reported overall networking revenue of $242 million, up 35 percent year over year. For Cisco's recent fiscal quarter, it reported a 3 percent decline in switching, to $3.45 billion. The company also reported a 4 percent decline in switching during its second fiscal quarter.
Terrapin's Becerra said the patent lawsuits against Arista might not have a significant impact on innovation, but a similar lawsuit would surely hold back innovation among startups.
"Arista has been around long enough now, so I don't think it will impede innovation for them, but for a smaller company with less revenues and more dependent on a certain product -- if a behemoth like Cisco sued them, that would really hurt a startup," said Becerra. "So these lawsuits set the precedent and [have] the potential to hurt innovation."
In a statement to CRN, Cisco said: "Cisco's goal has always been to protect our innovation, and to stop Arista from using our patented technology. If Arista wants to continue competing in this market, the ITC has ruled that they will need to do so without the use of stolen Cisco IP."
Marc Taxay, senior vice president and general counsel at Arista, said in a release, "Despite Cisco's rhetoric claiming that the lawsuits are a defensive move to protect its intellectual property, these actions are clearly part of a broader effort to use litigation to preserve Cisco's market position."
"If allowed to succeed, Cisco's scheme would have a chilling effect on innovation," said Arista's Taxay in the statement. "While we will defend our rights in these actions, our primary focus remains on the continued supply of products to our customers."
Although partners say Arista sales haven't been effected as by the patent lawsuits, they're still concerned about the future if some products are banned from being imported into the U.S.
The rulings by the ITC this year set the stage for a ban of Arista networking gear imported from Asia. One key technology that could be banned is Arista's SysDB technology, used in its EOS network operating system.
Cisco claims Arista stole more than 500 of Cisco's command-line expressions from its IOS network operating system to use in Arista's EOS software.
Arista says it has already released a new version of its EOS software containing design-arounds that it believes address the ITC ruling, according to a release. Arista says it intends to seek the regulatory approvals for these design-arounds. The U.S. Trade Representative is now set to review the ITC's ruling on the case to decide whether to uphold the import and sales ban.
Arista will also face trial in November on the patent and copyright infringement case around Cisco's command line interface patents.