Cisco Penalized $1.9B In Cybersecurity Infringement Trial, Plans Appeal

Cisco Systems, Inc. CSCO was ordered to pay $1.9 billion to Virginia-based Centripetal Networks Inc by a U.S. judge in the cybersecurity patent infringement trial on Monday, reports Bloomberg.

Details Of Trial: U.S. District Judge Henry Morgan that Cisco infringed four out of the five patents belonging to Centripetal Networks. Morgan stated it was "not a close call" due to inconsistencies in Cisco’s evidence, reports Reuters.

"Cisco did not advance any objectively reasonable defenses at trial. The infringing functionality was added to their accused products post June 20, 2017, and resulted in a dramatic increase in sales which Cisco touted in both technical and marketing documents," wrote Morgan.

The district judge added that 

"The fact that Cisco released products with Centripetal’s functionality within a year of these meetings goes beyond mere coincidence," said Morgan.

The penalty of $1.9 billion reflects $755.8 million in actual damages suffered by Centripetal, multiplied by 2.5 to reflect Cisco’s “willful and egregious” conduct, plus prejudgment interest.

Companies' Response: "It’s been a long time coming and was very hard fought," said Jonathan Rogers, Centripetal’s chief operating officer.

"We are disappointed with the trial court’s decision given the substantial evidence of non-infringement, invalidity and that Cisco’s innovations predate the patents by many years," Cisco said, as per Reuters.

Cisco said it will appeal against the judgment the U.S. Court of Appeals for the Federal Circuit.

Cisco's performance: The company posted annual profit of $11.2 billion in the latest fiscal year and reported a cash balance of $29.4 billion in August.

Its shares are down 20.2% year-to-date despite the broader tech index up more than 20%.

The stock closed about 0.8% higher at $38.57 per share on Monday.