Cisco Systems is taking on the role of a white knight in fighting a patent house jointly owned by some of the biggest names in tech including Apple, Microsoft, Blackberry, Ericsson, and Sony. Cisco is fighting on behalf of its customers who have been sued by the company – Rockstar Consortium – for violating patents it purchased from Nortel.
In October of last year Rockstar sued Google and its partners that make Android devices, and on another front the company decided to sue cable operators who use Cisco equipment. Seeing the writing on the wall, Cisco has decided to step into the fray and – at the very least – try to minimize the damage done to its customers.
On Friday Cisco filed a counter-claim (PDF) in Delaware federal court, arguing that Cisco and its customers don't infringe 28 different patents being asserted by Rockstar and its two subsidiaries, Constellation Technologies and Rockstar Consortium. Those customers include Time Warner, Charter, and other cable companies, who are being sued by Rockstar for using Cisco equipment such as modems and cable boxes that run on standards such as DOCSIS. Cisco also filed in Delaware – where Rockstar is incorporated to move the case out of the Eastern District of Texas court where the company seems to have had an advantage in past lawsuits.
"Cisco and Nortel were working and selling products in the same market for decades," points out Cisco's external legal counsel, John Desmarais to Ars Technica. "They never bothered each other, never sued each other, never threatened each other with infringement. If Nortel really thought those patents were infringed by Cisco, you think something would have been brought up."
Desmarais describes Rockstar's strategy of creating subsidiaries and suing as "a very aggressive tactic that flies in the history of these patents." He notes that Nortel made past commitments to standard-setting bodies to license its patents for free or on fair and reasonable terms, and that Rockstar isn't abiding by those agreements. He also points out that Nortel and Cisco co-existed for decades, and the company never sued Cisco for infringing on any patents.
Desmarais also has some bad news for those who invested billions in Rockstar expecting the thousands of patents from Nortel to yield great profits from litigation and settlements: they will end up disappointed. He believes those patents should be limited by the industry agreements that Nortel struck in the past.
"The bidding for the Nortel assets got out of control," says Desmarais. "Most of them are industry-standard committed. Now there's buyer's remorse. They paid way too much for assets that aren't worth that much. Rockstar is trying frantically to figure out how they're going to justify their existence."
Rockstar's ongoing litigation using the Nortel patent portfolio shows why the U.S. needs to review patent laws and implement some checks and balances for companies whose only source of income is filing lawsuits and getting settlements.
Source: Ars Technica