Networking

Cisco to pay up to $112 million in Power-over-Ethernet patent case

The litigation was initiated in February 2008 by Network-1 against Cisco and its Linksys division, Foundry Networks (now Brocade), Extreme Networks, Enterasys, 3Com (now HP), Adtran and Netgear. At issue was alleged infringement of Network-1's Remote Power Patent, U.S. Patent No. 6,218,930.

The case was heard in the U.S. District Court for the Eastern District of Texas, Tyler Division.

The settlement calls for approximately $32 million up front with up to approximately $80 million in royalty payments from Cisco alone over the next nine years. Adtran, Enterasys, Extreme and Foundry have also agreed to enter into non-exclusive licenses for the Remote Power Patent, according to Network-1.

Under the terms of the licenses, the companies agreed to pay to Network-1 an aggregate upfront payment of approximately $32 million and have also agreed to license the Remote Power Patent for its full term, which expires in March 2020.

In addition, Cisco agreed to pay royalties, beginning in 2011, based on its sales of PoE products up to maximum royalty payments per year of $8 million through 2015 and $9 million per year thereafter for the remaining term of the patent. The royalty payments are subject to certain conditions, including the continued validity of Network-1's Remote Power Patent — the actual royalty amounts received may be less than the caps stated above, according to Network-1.

Cisco declined to comment.

The settlement with 3Com provides for a dismissal of the litigation without prejudice. The dismissal does not apply to 3Com parent HP's PoE products — any future litigation involving Network-1 and HP involving the patent will be in the U.S. District Court for the Eastern District of Texas.

Network-1 owns six patents covering various telecommunications and data networking technologies. The Remote Power Patent was granted by the U.S. Office of Patents and Trademarks on April 17, 2001, and expires on March 7, 2020.

Netgear was not part of this particular infringement suit because the company had settled earlier. Netgear is a licensee of Network-1.

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