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Dodgy Cisco Nobbled By Judge Ordered To Pay $2.65 Billion

Cisco Systems the networking Company that sold Linksys to Belkin has been ordered to pay a $2.65 billion after they were found guilty of stealing patented cybersecurity technology.

They also prevented a small Company from bidding for Government contracts a move that could cost them millions more.

US District Judge Henry Morgan ruled that Cisco infringed four patents owned by Centripetal Networks.

The Company had developed a network protection system, funded in part by a grant from the Department of Homeland Security, only to see Cisco integrate the inventions into its own networks after meetings and presentations by Centripetal officials.

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

The judge said Centripetal was owed $755.8 million for past use of the inventions, which he increased by two-and-a-half times after finding that Cisco’s infringement was “wilful and egregious.” He also ordered that Cisco pay a 10% royalty on sales of some of its products for the next three years, and then 5% in royalties for three years after that.

The total damage award accounts for less than three months of profit for Cisco. The company reported net income of more than $11.04 billion for calendar year 2019. It’s also one of the most cash-rich companies in technology. In August it reported cash, cash equivalents and investments of $29.4 billion.

The judge found that the introduction of the cybersecurity features resulted in “a dramatic increase in sales which Cisco touted in both technical and marketing documents.”

The trial was originally supposed to be held before a jury, but the courthouse is closed to the public because of the coronavirus pandemic. Instead, Morgan, who became a federal judge in 1991 and took senior status in 2004, conducted the trial over the Zoom teleconferencing app.

The opinion was released after Morgan issued an order denying Cisco’s request that he recuse himself from the case. The judge’s wife owns shares of Cisco, bought at the recommendation of a broker. Morgan said he had already reached his conclusion on the case, though not finished writing the opinion, when he learned of the ownership.

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