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

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<v Speaker 1>You're listening to taking Stock with pim Box on Bloomberg Radio.

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<v Speaker 1>It's a battle between Arista Networks and Cisco. To tell

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<v Speaker 1>us more, we've got Matt Larson. He is litigation analyst

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<v Speaker 1>for Bloomberg Intelligence. He joins us from our Bloomberg studio

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<v Speaker 1>in Washington, d C. He can be followed on Twitter

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<v Speaker 1>at Matt P. Larson. Matt, great to have you with us.

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<v Speaker 1>Tell us about this copyright patent lawsuit battle Arista networks

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<v Speaker 1>versus Cisco has to do with something that people wear

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<v Speaker 1>on their wrists, the fitbit. Yeah, sure, they're actually their

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<v Speaker 1>two lawsuits. The Arista Cisco battle is looking at network switches,

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<v Speaker 1>which are essentially routers for large data centers UM. Arista's

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<v Speaker 1>has been gobbling up Cisco's market share and they filed

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<v Speaker 1>suit maybe a couple of years ago. Uh, just a

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<v Speaker 1>slew of lawsuits in the International Trade Commission and district court. UM.

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<v Speaker 1>We're kind of coming to the end of the battle.

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<v Speaker 1>Cisco was threatening an import band they won the International

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<v Speaker 1>Trade Commission K and it looked like Arista's products were

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<v Speaker 1>going to be blocked from US sales UM when Arista

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<v Speaker 1>was able to move manufacturing to the US to store

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<v Speaker 1>ups and US inventories UM. And what what we're seeing

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<v Speaker 1>in this case is Cisco is going to initiate kind

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<v Speaker 1>of the next phase of litigation. Arista seems to have

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<v Speaker 1>avoided a lot of UM, a lot of the potential

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<v Speaker 1>bands UM, much to Cisco's chagrin, and so Cisco is

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<v Speaker 1>preparing to now file a new suit. It looks like

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<v Speaker 1>in order to actually get products blocked from the U

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<v Speaker 1>s or it seeks some kind of monetary sanctions, and

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<v Speaker 1>so it's it's been a battle over over share in

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<v Speaker 1>the network switch market. Um and really just kind of

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<v Speaker 1>difficulty for Cisco to enforce its intellectual property against Arista. Now,

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<v Speaker 1>Arista if it goes to make the products and procuring

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<v Speaker 1>the components, if they make this in the United States,

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<v Speaker 1>then they can sell it to US customers and they

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<v Speaker 1>account for about sevent sales. That's right. One of the

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<v Speaker 1>you know, the lawsuit was filed in the International Trade Commission,

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<v Speaker 1>and the only remedy that the i t C offers

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<v Speaker 1>are our product bands. They don't typically give money damages

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<v Speaker 1>except in sanctions and for some isolated incidents. Uh. And

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<v Speaker 1>there was a big problem for Ariska. They were manufacturing

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<v Speaker 1>products abroad and importing them into the US. UH. So

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<v Speaker 1>you know what they did to to avoid the threat

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<v Speaker 1>of this import band as they moved everything to tow

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<v Speaker 1>or you know a large portion of their manufacturing to

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<v Speaker 1>the US, so there's not an import issue. Um. And

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<v Speaker 1>so they've got kind of stores and are able to

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<v Speaker 1>make US sales for the short term, so sales really

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<v Speaker 1>haven't been impacted. UM. They're projected to do one point

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<v Speaker 1>one billion in revenue in twenty sixteen. Um. But in

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<v Speaker 1>the meantime, you know, Cisco is kind of scratching its

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<v Speaker 1>head saying, we have these orders. We won this patent case. Uh,

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<v Speaker 1>there should be some remedy. Um, so they're going to

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<v Speaker 1>kind of go back and try to get either stricter

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<v Speaker 1>orders that um that kind of put higher burdens for

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<v Speaker 1>US sales on Arista. Uh you know, next next eight

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<v Speaker 1>months to twelve months, or they're gonna start seeking monetary sanctions.

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<v Speaker 1>There are also some other trials in this battle between

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<v Speaker 1>Cisco and Arista. There's a copyright dispute that's going to

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<v Speaker 1>trial in November where we could see some potential money

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<v Speaker 1>damages if things go Cisco's away. Uh. There's another I

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<v Speaker 1>t C case where there's a decision coming out at

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<v Speaker 1>the end of this week. So there's gonna be a

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<v Speaker 1>lot of activity in this brewing battle between Cisco and Arista.

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<v Speaker 1>All right. Now, the lawyers are also being kept busy

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<v Speaker 1>by a case involving Jawbone and Fitbit. Tell us about this, Yeah,

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<v Speaker 1>that's right. So this is the the activity tracker battle. Um.

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<v Speaker 1>As you know, as everybody's familiar with their activity trackers

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<v Speaker 1>are all the rage people have them on their wrists.

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<v Speaker 1>You've got your step counters. UM. A couple of years ago,

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<v Speaker 1>Jawbone filed suit against Fitbit, alleging that Fitbit, after hiring

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<v Speaker 1>some job and employees, had misappropriated trade secrets related to

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<v Speaker 1>both business activities and the actual technology that went into

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<v Speaker 1>uh these fitness trackers. UM. And so again they've they've

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<v Speaker 1>filed suit in the International Trade Commission seeking to have

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<v Speaker 1>some of fitbits products blocked from the US markets. UM.

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<v Speaker 1>It started out as a patent and trade secrets case.

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<v Speaker 1>A lot of the patents got knocked out, only the

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<v Speaker 1>trade secrets portion is remaining. Uh. They went to trial

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<v Speaker 1>a couple of months ago, and we're waiting on the

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<v Speaker 1>final decision in that case. It should come out this afternoon. UM.

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<v Speaker 1>And what's effectively going to happen is the judge who

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<v Speaker 1>heard the case is going to make an initial ruling

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<v Speaker 1>either in fitbits favor saying you know, no harm, no foul,

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<v Speaker 1>there was no misappropriation of trade secrets, or she's gonna

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<v Speaker 1>rule in job Bones favor and say, look, Fitbit has

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<v Speaker 1>incorporated some of these ill gotten trade secrets into their

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<v Speaker 1>products and may recommend a US product band. That worst

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<v Speaker 1>case scenario would be implemented in February, which gives Fitbits

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<v Speaker 1>some time to potentially design around to UH to remedy

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<v Speaker 1>any perceived wrongdoing or anything like that. And job Bon

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<v Speaker 1>is currently privately held, while Fitbit, a publicly traded company

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<v Speaker 1>trading under the symbol f I T shares a Fitbit

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<v Speaker 1>down nearly fifty percent so far this year, shares trading

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<v Speaker 1>higher today by fifty three cents at fourteen dollars and

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<v Speaker 1>nineties seven cents my thanks to Matt Larson. He is

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<v Speaker 1>litigation analyst for Bloomberg Intelligence. Of course, Bloomberg Intelligence provides

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<v Speaker 1>real time research and context for a variety of industries.

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<v Speaker 1>Terminal customers can access this function at b I go

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<v Speaker 1>on the Bloomberg this is taking stock. I'm pim Fox

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