Arista Unfortunately, we could not get stock quote ANET this time. have filed with the Securities and Exchanges Commission (SEC) in the US that they are suspending imports into the US. This is to comply with a ruling made earlier in the year, where the US International Trade Commission (USITC) ruled in a dispute between Arista and Cisco Cisco Systems, Inc. 56,82 +0,06 +0,11%.
The dispute filed in 2014 centred on Cisco’s belief that six patents that Arista infringed in their kit. The USITC found that four of the six patents were not infringed in Arista’s ethernet switches. The remaining two patents are not infringed, after a review by the Patent Trail and Appeal Board.
Using the USITC to block imports into the US is a key element of most trade disputes. A ruling from them prevents an organisation gaining access to the largest market place in the world. The PTAB and USITC disproved the claims of Cisco patent infringement. (Cisco argue that the PTAB did not have access to the full information from the ITC). Arista filed to have the import suspension lifted pending Cisco’s appeal of the PTAB ruling. Cisco, of course, filed an opposing motion. The suspension following the PTAB review is pending a ruling from the USITC.
As this makes a major dent on the publicly traded Arista, they need to file a notice with the SEC. This is to inform their shareholders and the SEC of material changes in their business. Arista are reworking their affected products.
Reworking has a cost and time penalty in which they cannot sell the original devices. So their best hope is that the USITC will rule in their favour, and against Cisco. Arista should win, given that four of six original patents aren’t infringed, and that PTAB have ruled similarly on the remaining two. But life isn’t quite that simple.
Cisco are saying that the some of the technology used was created whilst its founder Andreas Bechtolsheim worked at Cisco, on the Catalyst switches. Their view is somewhat different from that presented in Arista’s Form 8-K. I can understand Cisco’s need to protect its IP, and market share by following these tactics, and will no doubt use the FUD (fear, uncertainty and doubt) marketing strategy to put potential US Arista customers off ordering.