Cisco Keeps Pressure On Product Ban Ruling As Arista Tries To Sweep It 'Under The Rug,' Partners Say

Channel partners of Arista Networks say they’re stuck in the middle of a gigantic legal tug of war between it and rival Cisco, receiving little to no information regarding the potential ban of certain Arista products from being sold in the U.S.

’It’s pretty obvious that Arista is trying to sweep this product ban under the rug as much as possible for as long as possible until some governing body actually makes them do something,’ said one top executive from a solution provider and Arista partner, who declined to be named. ’[Arista will] continue to fight this … and Cisco will keep pushing because they have an army of lawyers and can afford to get into a long, drawn out legal battle.’

In June, the International Trade Commission ruled that Arista networking switches infringed on three of the five patents cited in a lawsuit filed by Cisco in December, 2014, recommending a ban on selling and importing several Arista products.

[Related: Cisco Launches Internal Restructuring Plan, Set To Cut 5,500 Employees]

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San Jose, Calif.-based Cisco claimed Arista violated two of its patents covering private VLAN network security, and a third covering its core SysDB technology, which Arista uses in its EOS networking operating system. Arista said it has since come out with a new version of EOS, version 4.16.6, containing software design-arounds to address features that the ITC ruled were infringements, which Cisco is strongly disputing.

Solution providers said the ruling isn’t affecting business right now as the ban, which technically took effect Aug. 23, doesn’t apply to customers already using Arista solutions affected by the ITC ruling.

’Technically, Arista told us that anything you buy from Arista, as of last week and moving forward, will ship [with] 4.16.6 or higher,’ said one top executive from a solution provider that's a top Arista and Cisco partner, and who did not want to be identified. ’The ITC said, ’We haven’t ratified this’. Arista said, ’Well, we’ve already done it. So until you come back and say this looks good, we’re just going to carry on' … and partners are sitting in the middle trying to make sense of it all.’

Arista has submitted its design arounds to US Customs for approval, according to Arista.

On Aug. 26, Cisco filed an enforcement complaint with the ITC regarding the redesigns of the products.

’The claim of a workaround is a thin veil to cover Arista’s ongoing infringement and convince its customers … that they are buying a product that is non-infringing,’ said Mark Chandler, Cisco’s general counsel, in a recent blog post. ’Based on what Arista has made publicly available to those who have purchased its products, it appears Cisco’s proprietary technology is still being used.’

Chandler said Arista’s ’supposed workarounds’ are null as they did not yet submit them for review to the ITC, or Arista has yet to convince the U.S. Customs and Border Protection office, in detailed review, that its products no longer infringe on Cisco patents. The U.S. Trade Representative's office concluded that the ITC import band and cease-and-desist order that covered the Arista products that were found as infringing Cisco's patent technology took effect Aug. 23.

In a statement to CRN, a spokeswoman for the U.S. Trade Representative's office confirmed that it chose to not take action on the ITC’s decision, which means the ITC's ban is ’final and effective.’

’For Arista’s customers and partners, the cease-and-desist order blocks the marketing, sale or distribution of all inventory of imported infringing products,’ said Chandler. ’It also means that Arista is unable to honor the service and warranty contracts for any infringing products sold after the ITC’s ruling date, June 23, 2016. Arista’s customers must now bear that risk.’

The ITC order means that Arista suppliers cannot import parts or components to manufacture infringing products in the U.S., according to Chandler. The penalty for importing or selling infringing product in violation of the cease-and-desist order is $100,000 per day, or twice the sales value of the infringing product imported or sold by Arista in the United States, whichever is higher, he said.

Arista said it’s in full compliance with the ITC’s decision and has appealed ’certain aspects of the infringement findings’ to the U.S. Court of Appeals for the Federal Circuit.

’All of our products now feature our new version of EOS, which contains design-arounds that we believe address the ITC’s findings,’ said Marc Taxay, senior vice president and general counsel for Arista, in a statement to CRN. ’Our primary focus remains the continued supply of non-infringing products to our customers … We believe that we are in full compliance with the ITC’s remedial orders.

Santa Clara, Calif.-based Arista has been on a tear in the networking space over the past several quarters. For its recent second fiscal quarter, which ended June 30, Arista reported a 37 percent increase in revenues year over year, to $269 million. For Cisco’s fourth fiscal quarter of 2016, the company reported revenue of $12.64 billion, down from $12.84 billion in the year-ago quarter. It also announced plans to cut 5,500 employees.

Chandler said Arista also faces trial in November on another patent and copyright infringement case around Cisco’s proprietary command line interface.