Cisco 2, StorageTek 0

10:45 AM - This week a jury decided in favor of Cisco Systems Inc. (Nasdaq: CSCO) in a longstanding patent dispute with Storage Technology Corp. (StorageTek) (NYSE: STK).

The decision is notable because it was resolved without a settlement. StorageTek sought $320 million, but Cisco fought to the finish without conceding a penny -- though it took more than five years.

Cisco's happy. "The interesting thing about this case is that it's winning one big battle in an overall war on baseless patent cases," asserts Matthew Powers, a partner at Weil, Gotshal & Manges, who defended Cisco in the suit. He maintains that large technology firms are routinely challenged by smaller players looking to cash in. "Patent law is very vague, and it's difficult for juries to understand... Companies wind up settling cases for huge sums, and that encourages more litigation," he says.

From StorageTek's standpoint, this week's ruling is a case of justice misserved. We are committed to protecting our intellectual property. Obviously, we are disappointed with the jury's verdict, and we are reviewing our options,” says company spokesman Jeremy Story.

StorageTek filed its first motion in 1999, claiming Cisco infringed two patents (U.S. 5842040 and 5566170) having to do with caching policy information in packetized networks. In 2002, a court ruled in Cisco's favor, but StorageTek appealed and in 2003 won another review regarding its patent 5842040. This was the case that ultimately wound up in a jury trial in California's Northern District court.Who's right? Was Cisco in fact bullied by an opportunistic StorageTek? Or was the storage outfit unjustly robbed of its rightful IP? Could it be a bit of both?

More than five years later, the truth lies buried beneath layers of legalese -- and therein lies the problem. This story isn't new; it's just a higher-profile instance of something that occurs regularly among IT suppliers. The vagaries of patent law forced both companies to pursue their respective complaints for nearly six years without a resolution, spending untold sums in the process.

Of course, patent litigation is such a fact of life in the IT industry that no one even noticed until the verdict was read. Certainly, neither of the parties was preoccupied with it or let it interfere with common interests (see StorageTek Resells Cisco).

Bottom line? Patent litigation's entrenched, with a culture and protocol all its own. Expect more of the same.

— Mary Jander, Site Editor, Byte and Switch0