Cisco's $56.9 mln network-security patent loss reinstated by Fed Circ. - Reuters

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• Willfulness finding justified by Cisco's unreasonable arguments
• Delaware court misinterpreted willfulness standard
• $8 million in attorneys' fees also justified

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Cisco Systems Inc is liable for at least $56.9 million in damages and attorneys' fees for willfully infringing SRI International Inc patents related to network security, the U.S. Court of Appeals for the Federal Circuit said Tuesday.

A three-judge Federal Circuit panel reinstated a 2016 jury finding that Cisco's infringement was willful and a Delaware federal judge's decision that Cisco's willfulness justified enhanced damages. Cisco's unreasonable defenses and litigation conduct, among other things, justified the decision, U.S. Circuit Judge Kara Stoll wrote for the panel, reversing part of a different Delaware judge's decision.

Cisco spokesperson Robyn Jenkins-Blum said the company was disappointed that the Federal Circuit didn't agree with the lower court's decision "despite the strong evidence that Cisco presented in an unremarkable patent infringement case," and that the company was considering its options.

Cisco attorneys Andrew Danford and Bill Lee of Wilmer Cutler Pickering Hale and Dorr didn't immediately respond to a request for comment.

SRI and its attorney Frank Scherkenbach of Fish & Richardson declined to comment.

Menlo Park, California-based research institute SRI International sued San Jose, California-based networking technology giant Cisco in 2013, arguing its intrusion prevention products infringed two SRI patents. A jury found in 2016 that Cisco infringed the patents willfully and awarded SRI more than $23.6 million in damages.

U.S. District Judge Sue Robinson doubled the damages in 2017 based on the jury's finding of willfulness and awarded SRI attorneys' fees and related expenses, bringing SRI's total award to more than $56.9 million.

Cisco argued on appeal to the Federal Circuit that the patents were invalid, the court misconstrued parts of the patents and the alleged infringement wasn't willful.

The Federal Circuit affirmed in 2019 that the patents were valid and infringed, but remanded the case based on issues with the jury's ruling that Cisco's infringement before 2012 was willful (finding Cisco wasn't aware of the patents at the time) and with related enhanced damages and fee awards.

On remand, U.S. District Judge Richard Andrews found last year that enhanced damages weren't justified at all because the infringement wasn't willful, but reinstated the $8 million fee award.

SRI appealed, arguing that the jury's willfulness finding was supported by evidence that Cisco's defenses to the infringement claims were unreasonable, among other things.

Stoll, joined by Circuit Judges Kathleen O'Malley and Alan Lourie, agreed Tuesday that Cisco's post-2012 infringement was willful, largely based on evidence that Cisco had no reasonable basis for its infringement defenses.

Stoll said Cisco's invalidity defense was based on prior art that was rejected twice by the Patent Office and lacked a key limitation of the patents at issue. SRI also presented evidence that Cisco misrepresented what SRI's patents cover in arguing against infringement.

The jury's finding that Cisco induced others to infringe also supported the ruling.

Cisco's behavior also justified enhanced damages, the appeals court found, citing Cisco's litigation conduct, "status as the world's largest networking company," "apparent disdain for SRI and its business model" and losses on "all issues during summary judgment and trial."

Stoll also affirmed that attorneys' fees were appropriate because the case was exceptional.

The case is SRI International Inc v. Cisco Systems Inc, U.S. Court of Appeals for the Federal Circuit, No. 20-1685.

For SRI: Frank Scherkenbach of Fish & Richardson

For Cisco: Andrew Danford and Bill Lee of Wilmer Cutler Pickering Hale and Dorr

(Editor's Note: This story has been updated with comment from Cisco.)

Read more:

Fed Circuit trims research center's patent win against Cisco

Cisco ordered to pay $23.7 mln for infringing network patents

Blake Brittain

Blake Brittain reports on intellectual property law, including patents, trademarks, copyrights and trade secrets. Reach him at blake.brittain@thomsonreuters.com

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