U.S. jury sides with Arista over Cisco in copyright battle

By Dan Levine

SAN FRANCISCO (Reuters) - A U.S. jury on Wednesday handed Arista Networks Inc a major win in a wide-ranging legal battle against Cisco Systems Inc, ruling that Arista owed no damages over Cisco's claims of copyright infringement.

The jurors in federal court in San Jose, California also found that Arista did not infringe a Cisco patent.

The verdict is the latest in sprawling litigation between San Jose-based Cisco, a major networking equipment company, and Santa Clara, California-based Arista, a fast-growing rival. The companies compete fiercely to sell ethernet switches to connect computers, servers and other devices, forming networks.

Cisco had been seeking roughly $335 million in damages over Arista copyright infringement of its user interfaces. In a statement, Cisco said it respectfully disagreed with the verdict and was determining its options for post-trial motions and appeal.

Arista said the outcome "represents an important victory not only for Arista but for the entire industry."

Arista shares closed up about 3 percent while Cisco shares declined 0.4 percent.

Cisco is fighting to preserve its position as a dominant market player, and to brush off a rival founded by former top Cisco executives. Arista's annual revenue has jumped 43 percent since 2014, the year it went public, to $837 million at the end of 2015.

During a two-week trial in a San Jose courtroom, Cisco argued that Arista "slavishly copied" its command line interfaces (CLI) - one- or two-word commands for operating its network switches - and that Arista's switches and routers infringe one of its patents for user interface technology.

Arista denied infringing Cisco's intellectual property.

The jury found that Arista infringed some of Cisco's copyrights. However, jurors also said Arista proved that external factors, other than Cisco's creativity, dictated the design of Cisco's content.

That legal defense, known as "scenes a faire," meant Arista owed no damages to Cisco.

The lawsuit is one of two Cisco filed in 2014 in San Jose that together accused Arista of infringing on 14 of its networking patents and related copyrights.

Cisco had also filed twin complaints at the U.S. International Trade Commission, which handed the networking giant a victory in June in one of the cases. The commission said Arista's ethernet switches, which carry data traffic, infringed three of Cisco's patents.

Last week, an ITC judge again sided with Cisco by ruling Arista had infringed two other Cisco patents. That decision must be reviewed by the full commission over the next few months.

(Reporting by Dan Levine; Editing by David Gregorio and Will Dunham)