Brocade, A10 Both Declare Victories In Ongoing Intellectual Property Lawsuit

Brocade and A10 Networks both claimed victories in the latest chapter of Brocade's lawsuit against A10 over alleged patent and copyright infringements.

Brocade on Friday said in a statement that the San Jose Federal Court confirmed a $60 million damages verdict against A10 Networks and granted Brocade a permanent injunction preventing A10 from selling its AX Series line of load balancers that include features infringing on Brocade's patents.

A10, on the other hand, on Friday said in a statement the court granted A10's motion for a new trial on patent damages and rejected Brocade's request for a broad injunction on the basis that it "overreaches."

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Instead, the court agreed to a narrowly tailored injunction against certain products, A10 said.

The ruling comes after the court in August ordered A10 Networks and its CEO Lee Chen to pay punitive damages of $112 million to Brocade after a jury ruled that A10 infringed upon Brocade's intellectual property and engaged in unfair competition.

In addition to finding that A10 infringed on three Brocade patents, the jury also found in favor of Brocade on unfair competition charges, specifically that A10's Chen had directly recruited an engineer to work simultaneously at both A10 and Foundry -- which in 2008 was acquired by Brocade -- thus violating that engineer's Foundry work agreement.

The court, in its Thursday ruling, found that A10 should be enjoined from selling AX series devices that include software and hardware, which the jury in August found infringing on Brocade's patents.

"If, as A10's experts asserted at trial, A10 can design around the infringing features, A10 may continue to sell the AX series without the infringing software, and the public may continue to enjoy the non-infringing features of the product. If A10 cannot design around the infringing features and loses market share as a result, the patented software and hardware are more essential to the product than A10 predicts, and A10 has no entitlement to continue infringement of Brocade's patents only to ensure that A10 remains competitive. Regardless of the outcome, Brocade's exclusive rights to the claims in its patents that it proved A10 infringed are protected," the judge wrote in his ruling.

A Brocade spokesperson told CRN that the judge Thursday confirmed the $60 million in liabilities related to copyright infringement the jury had found in the August judgment despite a move by A10 to vacate that judgment.

NEXT: Brocade, A10 Both Declare Victory

Brocade is also seeking an additional $50 million more in lost profits and royalties from patent infringement, the Brocade spokesperson said.

Brocade considers the ruling a decisive victory for the company, the spokesperson said.

Greg Straughn, CFO of A10, said his company was happy with parts of the ruling, and he expects more rulings in favor of A10 going forward.

Because of the narrowness of the Thursday court ruling, A10 will see no disruption in business, Straughn said. "We had arranged for contingencies," he said. "We've completed workarounds and are ready to ship on Monday."

Those workarounds in the products are transparent to users in terms of features, functions and performance, Straughn said. "If we didn't tell [the users], they wouldn't know," he said. "But we'll tell them."

A10 is also continuing to appeal the infringements, Straughn said. One basis for the appeal stems from A10's filing with the U.S. Patent and Trade Office to have the Brocade patents in question declared invalid.

While the USPTO found those patents to indeed be invalid because they were overly broad and did not reflect prior art, A10 was not allowed to use that finding in last year's jury trial, Straughn said.

The Brocade spokesperson, in an emailed statement to CRN about the USPTO ruling, wrote that, according to Brocade's legal experts, Brocade is not sure the basis of A10's claims with regards to the patent re-examination process.

"That process is on-going and is expected to take a long time to resolve, months if not years. In fact, in the six reexamination proceedings going on now, the US Patent and Trademark Office has affirmed the validity of all claims of two Brocade patents. The remaining four reexaminations are still pending and the PTO has not made any final determinations. Further, and perhaps most importantly, the court has already rejected motions by A10 to use the patent reexamination process to stop the permanent injunction, which the court awarded Brocade yesterday."

As far as last year's jury ruling that A10 interfered with the contract of the engineer who worked at both A10 and Foundry, Straughn said the jury had ruled in Brocade's favor and awarded it $1 in damages and $1 million in punitive damages. However, Straughn said, the judge Thursday threw out the $1 million in punitive damages. The engineer in question was a contract worker, Straughn said.

PUBLISHED JAN. 11, 2013