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Arista Networks has settled its ongoing patent dispute with Cisco, making a payment of $400m to its rival.
Arista got into a legal spate over 14 Cisco patent infringements in December 2014. While Cisco claimed patent infringement, Arista argued that Cisco went after it because it was gaining share in the lucrative datacentre market.
In a joint statement, the two networking companies said they had agreed that, with limited exceptions, no new litigation will be brought over patents or copyrights related to existing products for five years. In addition, for three years, they will use an arbitration process to address any patent issues regarding new products.
Arista said it was committed to maintaining the product modifications it made as a result of previous rulings, and would be making limited changes to further differentiate its user interfaces from Cisco products.
While 12 of the original patents on which infringement had been claimed have been invalidated, and Arista has created workarounds for the remaining two, Berenberg analyst Josep Bori claimed that, without the settlement, Cisco would have continued its legal case against its rival. He said the settlement reduced the risk of adverse court decisions in the coming months.
“Cisco was very likely to appeal the recent decisions favourable to Arista, extending the uncertainty for Arista’s customers as the International Trade Commission (ITC) was expected to wait for the final resolution before removing its import ban orders of allegedly infringing products,” said Bori.
A Forrester Wave report published in March positioned Arista as a leader, with a stronger software-defined networking (SDN) product strategy than Cisco.
In the Hardware platforms for software-defined networking, Q1 2018 report, Forrester principal analyst Andre Kindness attributed Arista’s growth to its operating system (EOS), its extensive set of application programming interfaces (APIs) and its focus on creating datacentre networking solutions.
“Besides enabling multiple paths to automation with its own networking hardware, Arista Networks allows customers to deploy EOS on third-party hardware, cloud platforms and inside containers,” wrote Kindress.
Berenberg’s Bori said the settlement would help Arista continue to evolve its product roadmap without being hampered by future legal proceedings by Cisco, which could slow down Arista’s strategy.
Arista is expected to roll out its Cognitive Cloud Networking for the Campus offering in the third quarter of 2018. It is also set to introduce the Arista 7170 programmable switch for cloud workloads and recently announced the acquisition of Mojo Networks, a small supplier with a cognitive Wi-Fi technology that will be integrated with Arista CloudVision.
In a report on the settlement, Bori speculated that Cisco could now buy Arista to gain expertise and a big stake in cloud networking, but such a move would lead to anti-trust issues.
“Cisco continues to struggle in the cloud segment. While we believe that anti-trust concerns are likely insurmountable and that the two companies will remain fierce competitors, we also believe that Cisco needs a change of direction to recover its relevance in the cloud vertical,” wrote Bori.
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