Centripetal Networks, a cybersecurity solutions provider based in Virginia, will receive around $2.65 billion to $3.25 billion in total damages after winning a patent infringement lawsuit against Cisco Systems (NASDAQ: CSCO).

On Monday, U.S. District Judge for the Eastern District of Virginia Henry Coke Morgan, Jr. ruled in favor of Centripetal after a 22-day bench trial, in which he found that Cisco infringed five U.S. patents owned by cybersecurity solutions provider.

Cisco’s patent infringement was “willful and egregious”

In his 178-page Opinion and Order, Judge Morgan ruled that Cisco “literally INFRINGED” Centripetal Networks’ U.S. patents with numbers 9,203,806 (the ‘806 Patent), 9,560,176 (the ‘176 Patent), 9,686,193 (the ‘193 Patent), and 9,917,856 (the ‘856 Patent).

Judge Morgan wrote, “The Court Fins that Cisco did not advance any objectively reasonable defenses at trial as to the four infringed and valid patents…Its non-infringement case was grounded upon their old technology. The infringing functionality was added to their accused products post-June 20, 2017, and resulted in a dramatic increase in sales which Cisco touted in both technical and marketing documents.”

Judge Morgan found that the San Jose, California-based tech giant’s patent infringement “was willful and egregious” and he “enhancing the damages by a factor of 2.5 is appropriate.

Cisco to pay $1.9 billion to Centripetal Networks

Based on his findings, Judge Morgan ordered Cisco to pay Centripetal $755,808,545 in damages (enhanced by a factor of 2.5X) to equal $1,889,521,362.50). He also ordered the tech giant to pay pre-judgment interests of $13,717,925 applied to the actual damages before enhancement.

The total damages awarded to Centripetal Networks were $1,903,239,287.50 payable in a lump sum due on the judgment date.

Centripetal Networks to receive a running royalty from Cisco

In addition, Judge Morgan ordered Cisco to pay Centripetal a running royalty of 10% on the apportioned sales of the accused products and their successors for a period of three years. After that, the running royalty will be 5% on such sales for a second three-year term.

The Virginia-based cybersecurity solutions provider estimated that it will receive as much as $3.25 billion in total damages from Cisco’s willful patent infringement of its technologies. It is the largest damages award in any patent infringement case to date.

In a statement, Centripetal CEO Steven Rogers said, “The Court’s ruling affirms the opportunity for innovative companies like ours to develop solutions for the largest market opportunities. We’ve worked toward a paradigm shift in security through our development of the fundamental technologies behind CleanINTERNET. We believe these technologies are important for the country. Without the protection of a patent, an emerging company could never take on big important challenges like these. We are grateful to the court for affirming this.”

The case is Centripetal Networks, Inc. v. Cisco Systems, Inc., No. 2:2018cv00094 - Document 621 (E.D. Va. 2020). Read the court's opinion and order here.

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