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Investor Contact

Charles Yager
Director, Product and
Investor Advocacy
cyager@arista.com 

Chuck Elliott
Director, Business and
Investor Development
chuck@arista.com

Arista Legal Update

Update on 944 ITC Investigation
January 15, 2017

In light of our commitment to provide full transparency to our readers, we would like to provide an update regarding the ITC 944 investigation, including a letter issued by Customs and Border Protection (CBP) on the evening of Friday, January 13, 2017, revoking CBP’s previously issued 177 ruling.

It is important to understand that CBP has not ruled that Arista’s products infringe. Instead, CBP has expressed concern that its original ruling was incorrect, based on input provided by Cisco. It is equally important to understand that Arista has not yet responded to Cisco’s arguments and has not yet had an opportunity to address any concerns Customs may have as a result of those arguments. We look forward to engaging with CBP in the coming days, and we are confident that CBP will diligently and carefully evaluate the facts, as they have done throughout this process.

Cisco’s efforts at Customs are one part of a legal attack—started in December 2014—that spans two separate District Court cases and two ITC Investigations. Cisco originally claimed that Arista’s products infringed 14 patents largely covering commonly implemented networking features and alleged copyrights asserted against a limited number of elements in Arista’s Command Line Interface (CLI).

Notably, at this stage in the dispute and despite astonishing distortions to the contrary by our adversary, Arista has obtained significant victories in these proceedings, prevailing on 9 out of the 14 asserted patents and, on December 14, 2016, obtaining a favorable jury verdict on Cisco’s copyright claims.

Cisco’s motives

Cisco’s motives for this legal assault were made public last December during the copyright trial. Through the testimony of current and former Cisco executives, including John Chambers, it was revealed that Cisco itself believed that it was at risk of becoming irrelevant in high speed data centers and that Arista was outperforming Cisco in price, product, roadmap, and vision. The testimony revealed that these Cisco failures came despite its six-year campaign to “beat Arista,” including efforts to build Arista killer products, to disrupt us in customer accounts, and to stop our 2014 IPO.

Despite Cisco’s unhinged rhetoric and promises to shut Arista down, we are still standing tall thanks to the wide-ranging support we have received from the larger community who sees this assault for what it is.

ITC 944 update 

On August 22, 2016, the Presidential review period for the ITC’s Final Determination in the 944 case ended. Of six patents at issue, the ITC found infringement of three: the ‘145 and ‘592 patents, which were asserted against PVLANs, and the ‘537 patent. Consequently, the ITC issued a limited exclusion order and a cease and desist order that prohibited Arista from importing into the United States (or selling after importation) products that infringed these patents. These orders did not prohibit Arista from either importing or selling non-infringing products.

Contrary to Cisco’s public statements, the ‘537 patent does not broadly cover our implementation of a centralized database or the multi-process state-sharing architecture in our Extensible Operating System (EOS). Instead, the ‘537 patent is directed to a narrow, request-based process to register “managing subsystems” to “externally manage” router configuration data of a centralized database—a process that, to our knowledge, Cisco does not even use in its own Ethernet switch operating systems (IOS or NX-OS).

In our effort to fully comply with the ITC’s remedial orders, Arista undertook a significant redesign of EOS, which included the complete removal of the PVLAN feature as well as the EOS agent-to-SysDB write mount requests Cisco accused of infringing the ‘537 patent. Far from a “sham,” these product modifications removed central elements of the patented technologies found directly in the patent claims. Completing this redesign effort required Arista’s commitment of substantial financial and engineering resources over many months.

CBP process

In tandem with these activities, Arista sought a ruling from CBP that Arista’s redesigned products no longer infringed the ‘145, ‘592, and ‘537 patents, which would allow Arista to import these products into the United States. The CBP process is widely used, and the ITC’s Final Determination specifically reaffirmed that it was proper for Arista to use that process to obtain import clearance for its design arounds in this case.

After many months of discussions and extensive review by CBP, we were pleased to receive CBP’s approval of our redesigned products on November 18, 2016. As a result, CBP reopened the borders and allowed us to resume importation of our products into the United States. As we explained at that time, however, pursuant to applicable regulations, CBP’s ruling could be modified or revoked if found to be in error, not in accordance with the current views of CBP, or in conflict with any future ITC findings.

Naturally, given Cisco’s transparent motives, the stakes involved, and its embarrassing loss of the CLI copyright case in the District Court in December, it is not surprising that Cisco aggressively campaigned CBP, and perhaps others, to revoke CBP’s decision. Indeed, Cisco filed its formal request for revocation (without Arista’s knowledge) the day Arista obtained a favorable jury verdict in the copyright case.

CBP developments

On Friday evening, January 13, 2017, we were disappointed to receive, without warning, a letter from CBP revoking its November 2016 approval of our design-around for the ’537 patent. Significantly, CBP did not state any reasons for its revocation and did not state that Arista’s redesign infringes the ’537 patent. Instead, based on Cisco’s concerted efforts to undo its prior approval, CBP found that “Cisco has raised a fair ground of doubt” as to CBP prior ruling.  

Although CBP revoked its approval of our design-around in response to Cisco’s aggressive efforts, it did so without hearing from us concerning Cisco’s arguments. We are working to engage with CBP to respond to those arguments as soon as possible, and we are confident that CBP will continue to diligently and carefully evaluate the facts, as it has done throughout this process. We have consistently believed, and remain confident today, that we have implemented design-arounds that make our EOS products noninfringing.

Next steps in 2017

Although we strongly disagree with the ITC’s rulings and CBP’s revocation decision, we have a deep respect for these institutions and this process, and we remain completely committed to complying with the orders and rulings of the ITC and CBP. While we do not yet understand or have any formal explanation for CBP’s revocation, we will absolutely continue to cooperate and to adhere to the process of obtaining formal approval of our redesign from CBP. We are grateful for the efforts the ITC and CBP have made, we continue to believe our design around does not infringe, and we look forward to the opportunity to address whatever concerns CBP may have.

We also plan to lawfully fulfill orders through domestic manufacturing sources and with products that contain our non-infringing redesign. It is important to note that the ITC’s orders do not prohibit us from selling non-infringing products manufactured in the US—even with imported subcomponents.

Commitment to our customers

Since the beginning of Cisco’s legal attack, we have explained that we are committed to the continued lawful supply of products to our customers, and to servicing them without disruption. We remain firm in that commitment.

Cisco is a dominant and powerful company with enormous political clout and lobbying capabilities. It has brought that power to bear in many ways in these legal actions and in the marketplace. Through numerous blog posts, press conferences, and other means, Cisco also has attempted to portray itself as an innocent, injured party, while cynically misstating the facts and generating FUD with misleading spin and, frankly, somewhat unhinged blog posts.

We at Arista have taken a very different approach. We have been very upfront with you, our customers, partners, investors, and the public at large about Cisco’s legal attacks and our response to them.

For the first time in decades the industry has recognized in Arista a true alternative to Cisco; a better and compelling replacement for the stagnant technology that has dominated Ethernet switching based on momentum instead of innovation. Arista’s contributions to the Cloud and SDN are welcome and refreshing improvements in this marketplace.

We cannot thank you enough for your unwavering support.

Sincerely,

The Arista Leadership Team