Bloomberg's Larson on the Cisco-Arista Patent Litigation(Audio)

today's afternoon call. And here's ed Laalan. Good afternoon, Charlie, man U. S Averages are hired today, with the Dow up by thirty two points, SUP games six and NASDAC rises nineteen, small cap six hundred games six and the US tenure yield at one point five cent. Eight out of ten SMP sectors are higher, led by gains in materials, energy, and consumer discretionary sectors, leading to the downside our utilities

and consumer staples down. Transports rise thirty six, NASDAC, Biotechs are up, for utilities lose one, and the VIX is little changed. Leaders to the upside of the Dow include Nike, DuPont and Cisco, while Dow leaders to the downside include Boeing, Exxon, and Walmart. Best Buy gains eighteen percent today after beating estimates, and it was a big day for the home builders. New home sales beat estimates and Told Brothers reported earnings.

Toll gains eight percent and Lennar up three percent after the Bell Tonight, look from Earning, Look for earnings from into It and die Com Industries. Live from the First Word Breaking News desk. I'm at the lawn, Charlie. All right, thank you very much, Jad and to hear live breaking news over your Bloomberg type squawk squ a w K on your terminal. I'm Charlie Pelton. That's sub Bloomberg Business Flash. You're listening to taking Stock with pim Box on Bloomberg Radio.

It's a battle between Arista Networks and Cisco. To tell us more, we've got Matt Larson. He is litigation analyst for Bloomberg Intelligence. He joins us from our Bloomberg studio in Washington, d C. He can be followed on Twitter at Matt P. Larson. Matt, great to have you with us. Tell us about this copyright patent lawsuit battle Arista networks versus Cisco has to do with something that people wear on their wrists, the fitbit. Yeah, sure, they're actually their

two lawsuits. The Arista Cisco battle is looking at network switches, which are essentially routers for large data centers UM. Arista's has been gobbling up Cisco's market share and they filed suit maybe a couple of years ago. Uh, just a slew of lawsuits in the International Trade Commission and district court. UM. We're kind of coming to the end of the battle.

Cisco was threatening an import band they won the International Trade Commission K and it looked like Arista's products were going to be blocked from US sales UM when Arista was able to move manufacturing to the US to store ups and US inventories UM. And what what we're seeing in this case is Cisco is going to initiate kind of the next phase of litigation. Arista seems to have avoided a lot of UM, a lot of the potential bands UM, much to Cisco's chagrin, and so Cisco is

preparing to now file a new suit. It looks like in order to actually get products blocked from the U s or it seeks some kind of monetary sanctions, and so it's it's been a battle over over share in the network switch market. Um and really just kind of difficulty for Cisco to enforce its intellectual property against Arista. Now, Arista if it goes to make the products and procuring the components, if they make this in the United States, then they can sell it to US customers and they

account for about sevent sales. That's right. One of the you know, the lawsuit was filed in the International Trade Commission, and the only remedy that the i t C offers are our product bands. They don't typically give money damages except in sanctions and for some isolated incidents. Uh. And there was a big problem for Ariska. They were manufacturing

products abroad and importing them into the US. UH. So you know what they did to to avoid the threat of this import band as they moved everything to tow or you know a large portion of their manufacturing to the US, so there's not an import issue. Um. And so they've got kind of stores and are able to make US sales for the short term, so sales really haven't been impacted. UM. They're projected to do one point

one billion in revenue in twenty sixteen. Um. But in the meantime, you know, Cisco is kind of scratching its head saying, we have these orders. We won this patent case. Uh, there should be some remedy. Um, so they're going to kind of go back and try to get either stricter orders that um that kind of put higher burdens for US sales on Arista. Uh you know, next next eight months to twelve months, or they're gonna start seeking monetary sanctions.

There are also some other trials in this battle between Cisco and Arista. There's a copyright dispute that's going to trial in November where we could see some potential money damages if things go Cisco's away. Uh. There's another I t C case where there's a decision coming out at the end of this week. So there's gonna be a lot of activity in this brewing battle between Cisco and Arista. All right. Now, the lawyers are also being kept busy

by a case involving Jawbone and Fitbit. Tell us about this, Yeah, that's right. So this is the the activity tracker battle. Um. As you know, as everybody's familiar with their activity trackers are all the rage people have them on their wrists.

You've got your step counters. UM. A couple of years ago, Jawbone filed suit against Fitbit, alleging that Fitbit, after hiring some job and employees, had misappropriated trade secrets related to both business activities and the actual technology that went into uh these fitness trackers. UM. And so again they've they've filed suit in the International Trade Commission seeking to have some of fitbits products blocked from the US markets. UM. It started out as a patent and trade secrets case.

A lot of the patents got knocked out, only the trade secrets portion is remaining. Uh. They went to trial a couple of months ago, and we're waiting on the

final decision in that case. It should come out this afternoon. UM. And what's effectively going to happen is the judge who heard the case is going to make an initial ruling either in fitbits favor saying you know, no harm, no foul, there was no misappropriation of trade secrets, or she's gonna rule in job Bones favor and say, look, Fitbit has incorporated some of these ill gotten trade secrets into their

products and may recommend a US product band. That worst case scenario would be implemented in February, which gives Fitbits some time to potentially design around to UH to remedy any perceived wrongdoing or anything like that. And job Bon is currently privately held, while Fitbit, a publicly traded company trading under the symbol f I T shares a Fitbit down nearly fifty percent so far this year, shares trading higher today by fifty three cents at fourteen dollars and

nineties seven cents my thanks to Matt Larson. He is litigation analyst for Bloomberg Intelligence. Of course, Bloomberg Intelligence provides real time research and context for a variety of industries. Terminal customers can access this function at b I go on the Bloomberg this is taking stock. I'm pim Fox and this is Bloomberg. Bloomberg taking Stock has brought you by Jaguar Manhattan. Visit Jaguar Manhattan today, where New York goes for luxury. Conveniently located a fifty four and eleventh

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