The U.S. Supreme Court ruled against Cisco Systems Inc. in a
patent case, striking down an argument the company used to counter
allegations that it had violated another firm's intellectual
property.
A lower court previously ordered Cisco to pay nearly $64 million
to Commil USA LLC, which alleged that Cisco violated a patent
covering a method of implementing short-range wireless networks. An
appeals court subsequently struck down the damages award and other
portions of that verdict.
The Supreme Court rejected portions of the appellate ruling,
focusing on a defense strategy used by Cisco. Its ruling Tuesday
concerned cases where companies are accused of "inducing" patent
infringement by others, as when they sell products containing
features that infringe patents. Cisco raised a defense against that
charge based on its belief that the patent in question was
invalid.
The Supreme Court ruling threw out that defense.
"The question the Court confronts today concerns whether a
defendant's belief regarding patent validity is a defense to a
claim of induced infringement. It is not," wrote Justice Anthony
Kennedy, speaking for the majority in the court's 6-2 vote.
"This decision restores the common-sense notion that patents
approved by the U.S. Patent and Trademark Office are presumed
valid," said Mark Werbner, a lawyer at the Dallas-based firm Sayles
Werbner that represented Commil USA.
Cisco, the big Silicon Valley maker of networking equipment,
said it was optimistic about its prospects in a retrial expected
following the high-court ruling.
"The federal circuit's ruling vacating the jury verdict in this
case still stands," a Cisco spokeswoman said. "Today's decision
simply eliminates one of many strong defenses available to Cisco
and we look forward to the retrial of the case."
Case Collard, a partner at the Law firm Dorsey & Whitney who
wasn't involved in the case, said the ruling essentially left
intact the status quo for companies battling firms that are formed
to enforce patents, sometimes called nonpracticing entities or
patent trolls. The decision didn't validate Cisco's defense, nor
would it increase further litigation, he wrote in an email.
Write to Don Clark at don.clark@wsj.com
Access Investor Kit for Cisco Systems, Inc.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US17275R1023
Subscribe to WSJ: http://online.wsj.com?mod=djnwires