10:45 AM - This week a jury decided in favor of Cisco Systems Inc. (Nasdaq: CSCO) in a longstanding patent dispute with Storage Technology Corp. (StorageTek) (NYSE: STK).
The decision is notable because it was resolved without a settlement. StorageTek sought $320 million, but Cisco fought to the finish without conceding a penny -- though it took more than five years.
Cisco's happy. "The interesting thing about this case is that it's winning one big battle in an overall war on baseless patent cases," asserts Matthew Powers, a partner at Weil, Gotshal & Manges, who defended Cisco in the suit. He maintains that large technology firms are routinely challenged by smaller players looking to cash in. "Patent law is very vague, and it's difficult for juries to understand... Companies wind up settling cases for huge sums, and that encourages more litigation," he says.
From StorageTek's standpoint, this week's ruling is a case of justice misserved. We are committed to protecting our intellectual property. Obviously, we are disappointed with the jury's verdict, and we are reviewing our options, says company spokesman Jeremy Story.
StorageTek filed its first motion in 1999, claiming Cisco infringed two patents (U.S. 5842040 and 5566170) having to do with caching policy information in packetized networks. In 2002, a court ruled in Cisco's favor, but StorageTek appealed and in 2003 won another review regarding its patent 5842040. This was the case that ultimately wound up in a jury trial in California's Northern District court.
