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Cisco loses round in fight against patent troll

Cisco's attempt to block a patent enforcement company -- commonly known as patent trolls -- from collecting licensing fees has been shot down by a federal court in Chicago.

The Wall Street Journal reports that the court dismissed Cisco's legal claims that patent enforcement company Innovatio IP Ventures was using illegal tactics to attempt to collect royalties from Cisco customers. The court ruled that Innovatio was protected by the U.S. Constitution in its aggressive attempts, which included "threatening" letters to customers using Cisco, Netgear and Motorola Solutions Wi-Fi gear.

The three companies filed their claim last October.

[ WHEN COMBATANTS ALLY: Tech companies forming 'patent troll' alliance ]

The Chicago court ruled in favor of Innovatio, claiming the patent company was protected by a First Amendment principle that protects licensing demands made before a lawsuit, according to the Journal's report. The principle doesn't extend to "sham litigation," the Journal reports, but Innovatio's tactics didn't rise to that level, the court found.

Despite the ruling, Cisco said it will continue to shield customers from "being abused" by "misleading demands."

In a statement, Cisco General Counsel Mark Chandler said: "We are pleased the judge is allowing us to proceed with claims related to Innovatio's efforts to force customers to pay excessive fees for patents related to standards that were pledged to be available at a reasonable rate. We are, however, disappointed the court interpreted the right to 'petition the government' so broadly as to immunize from RICO liability Innovatio's misleading statements that were intended to induce thousands of US businesses to pay money that Innovatio knows they do not owe since they are already fully licensed. We do not believe those misleading demands should be immune from liability, and we will review the steps available from here to vindicate our customers' rights."

Jim Duffy has been covering technology for over 25 years, 21 at Network World. He also writes The Cisco Connection blog and can be reached on Twitter @Jim_Duffy.

Read more about data center in Network World's Data Center section.


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