Two days after announcing plans
to invest $1 billion in an ambitious cloud computing venture, Cisco Systems
finds itself having to defend against a lawsuit alleging that some $43 billion in sales over the last five years infringe on patents. The company making the claim is Spherix, which describes itself as an intellectual property development company committed to the fostering and monetization of intellectual property.
Spherix alleges that Cisco ran afoul of 11 patents that relate to routers and switches, and all of which were developed by inventors at Nortel, which were then acquired by Spherix in December 2013.
"The company believes that the vast majority of Cisco's switching and routing revenue from March 2008 through the present has been generated by products and services implementing technology that the company believes infringes on the 11 patents," Spherix said.
The way Spherix sees it, Cisco generated revenues of over $6 billion from switching and over $3 billion from routers in the U.S. for its fiscal year ended July 27, 2013, and total revenues of over $30 billion from switching and $13 billion from routers in the U.S. for the five fiscal years ended July 27, 2013.
Spherix is seeking unspecified damages.
Just last month, Cisco inked
a cross-licensing patent agreement with Google to avoid this sort of thing. In a statement related to the deal, Google said the agreement would "reduce the potential for litigation," which was clearly a motivating factor for both sides.