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Speaker 1: You're listening to taking Stock with pim Box on Bloomberg Radio.
Speaker 1: It's a battle between Arista Networks and Cisco. To tell
Speaker 1: us more, we've got Matt Larson. He is litigation analyst
Speaker 1: for Bloomberg Intelligence. He joins us from our Bloomberg studio
Speaker 1: in Washington, d C. He can be followed on Twitter
Speaker 1: at Matt P. Larson. Matt, great to have you with us.
Speaker 1: Tell us about this copyright patent lawsuit battle Arista networks
Speaker 1: versus Cisco has to do with something that people wear
Speaker 1: on their wrists, the fitbit. Yeah, sure, they're actually their
Speaker 1: two lawsuits. The Arista Cisco battle is looking at network switches,
Speaker 1: which are essentially routers for large data centers UM. Arista's
Speaker 1: has been gobbling up Cisco's market share and they filed
Speaker 1: suit maybe a couple of years ago. Uh, just a
Speaker 1: slew of lawsuits in the International Trade Commission and district court. UM.
Speaker 1: We're kind of coming to the end of the battle.
Speaker 1: Cisco was threatening an import band they won the International
Speaker 1: Trade Commission K and it looked like Arista's products were
Speaker 1: going to be blocked from US sales UM when Arista
Speaker 1: was able to move manufacturing to the US to store
Speaker 1: ups and US inventories UM. And what what we're seeing
Speaker 1: in this case is Cisco is going to initiate kind
Speaker 1: of the next phase of litigation. Arista seems to have
Speaker 1: avoided a lot of UM, a lot of the potential
Speaker 1: bands UM, much to Cisco's chagrin, and so Cisco is
Speaker 1: preparing to now file a new suit. It looks like
Speaker 1: in order to actually get products blocked from the U
Speaker 1: s or it seeks some kind of monetary sanctions, and
Speaker 1: so it's it's been a battle over over share in
Speaker 1: the network switch market. Um and really just kind of
Speaker 1: difficulty for Cisco to enforce its intellectual property against Arista. Now,
Speaker 1: Arista if it goes to make the products and procuring
Speaker 1: the components, if they make this in the United States,
Speaker 1: then they can sell it to US customers and they
Speaker 1: account for about sevent sales. That's right. One of the
Speaker 1: you know, the lawsuit was filed in the International Trade Commission,
Speaker 1: and the only remedy that the i t C offers
Speaker 1: are our product bands. They don't typically give money damages
Speaker 1: except in sanctions and for some isolated incidents. Uh. And
Speaker 1: there was a big problem for Ariska. They were manufacturing
Speaker 1: products abroad and importing them into the US. UH. So
Speaker 1: you know what they did to to avoid the threat
Speaker 1: of this import band as they moved everything to tow
Speaker 1: or you know a large portion of their manufacturing to
Speaker 1: the US, so there's not an import issue. Um. And
Speaker 1: so they've got kind of stores and are able to
Speaker 1: make US sales for the short term, so sales really
Speaker 1: haven't been impacted. UM. They're projected to do one point
Speaker 1: one billion in revenue in twenty sixteen. Um. But in
Speaker 1: the meantime, you know, Cisco is kind of scratching its
Speaker 1: head saying, we have these orders. We won this patent case. Uh,
Speaker 1: there should be some remedy. Um, so they're going to
Speaker 1: kind of go back and try to get either stricter
Speaker 1: orders that um that kind of put higher burdens for
Speaker 1: US sales on Arista. Uh you know, next next eight
Speaker 1: months to twelve months, or they're gonna start seeking monetary sanctions.
Speaker 1: There are also some other trials in this battle between
Speaker 1: Cisco and Arista. There's a copyright dispute that's going to
Speaker 1: trial in November where we could see some potential money
Speaker 1: damages if things go Cisco's away. Uh. There's another I
Speaker 1: t C case where there's a decision coming out at
Speaker 1: the end of this week. So there's gonna be a
Speaker 1: lot of activity in this brewing battle between Cisco and Arista.
Speaker 1: All right. Now, the lawyers are also being kept busy
Speaker 1: by a case involving Jawbone and Fitbit. Tell us about this, Yeah,
Speaker 1: that's right. So this is the the activity tracker battle. Um.
Speaker 1: As you know, as everybody's familiar with their activity trackers
Speaker 1: are all the rage people have them on their wrists.
Speaker 1: You've got your step counters. UM. A couple of years ago,
Speaker 1: Jawbone filed suit against Fitbit, alleging that Fitbit, after hiring
Speaker 1: some job and employees, had misappropriated trade secrets related to
Speaker 1: both business activities and the actual technology that went into
Speaker 1: uh these fitness trackers. UM. And so again they've they've
Speaker 1: filed suit in the International Trade Commission seeking to have
Speaker 1: some of fitbits products blocked from the US markets. UM.
Speaker 1: It started out as a patent and trade secrets case.
Speaker 1: A lot of the patents got knocked out, only the
Speaker 1: trade secrets portion is remaining. Uh. They went to trial
Speaker 1: a couple of months ago, and we're waiting on the
Speaker 1: final decision in that case. It should come out this afternoon. UM.
Speaker 1: And what's effectively going to happen is the judge who
Speaker 1: heard the case is going to make an initial ruling
Speaker 1: either in fitbits favor saying you know, no harm, no foul,
Speaker 1: there was no misappropriation of trade secrets, or she's gonna
Speaker 1: rule in job Bones favor and say, look, Fitbit has
Speaker 1: incorporated some of these ill gotten trade secrets into their
Speaker 1: products and may recommend a US product band. That worst
Speaker 1: case scenario would be implemented in February, which gives Fitbits
Speaker 1: some time to potentially design around to UH to remedy
Speaker 1: any perceived wrongdoing or anything like that. And job Bon
Speaker 1: is currently privately held, while Fitbit, a publicly traded company
Speaker 1: trading under the symbol f I T shares a Fitbit
Speaker 1: down nearly fifty percent so far this year, shares trading
Speaker 1: higher today by fifty three cents at fourteen dollars and
Speaker 1: nineties seven cents my thanks to Matt Larson. He is
Speaker 1: litigation analyst for Bloomberg Intelligence. Of course, Bloomberg Intelligence provides
Speaker 1: real time research and context for a variety of industries.
Speaker 1: Terminal customers can access this function at b I go
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