Arista Networks Calls Rival Cisco a Monopolist


     SAN FRANCISCO (CN) – After being on the receiving end of multiple patent infringement lawsuits, Arista Networks served up an antitrust and unfair competition suit over Ethernet switches to rival Cisco Systems in Federal Court earlier this week.
     “This case is about Cisco’s ‘at all costs’ strategy to suppress competition,” Arista says in its complaint. “This action seeks to remedy that problem and restore competition to the data center.”
     According to Arista’s 61-page complaint, “Cisco, realizing that it is being out-competed and out-innovated by a far smaller competitor, has resorted to a scheme of anticompetitive conduct to retain its monopoly in the data center.”
     Up until this week Arista had been sitting on the other side of the courtroom defending itself against Cisco’s claims it violated 18 patents, filed in December 2014. Cisco says Arista “blatantly and extensively” copied its networking technologies and operating system software.
     There is no love lost between the rivals. Cisco also sued 11 Arista executives, including its founders, president and CEO, chief development officer, chief technology officer and seven vice presidents, all of whom Cisco says jumped from Cisco to Arista.
     The exodus allowed Arista to “avoid hiring thousands of engineers and making the substantial investments that would otherwise have been needed to legitimately develop its own technologies,” Cisco said in the 2014 lawsuit.
     Arista countered with antitrust claims that they say are a result of evidence uncovered during the discovery part of the legal proceedings.
     “Cisco knows what’s at stake,” Arista says in its complaint, although the parts of the complaint that explain what’s at stake have been redacted.
     But what Arista does say is that Cisco, “realizing that it is being out-competed and out-innovated by a far smaller competitor, has resorted to a scheme of anticompetitive conduct to retain its monopoly in the data center.”
     Arista calls Cisco’s actions “a last resort of an incumbent monopolist who fears competition from more innovative firms that threaten that monopoly,” according to its complaint.
     Cisco has dominated the market for Ethernet switches – the connections between computers, servers, storage and other devices to form a network – for two decades, Arista says in its complaint, adding that without Ethernet switches modern businesses would not be able to function.
     The company says Cisco also dominates the narrower market for high-speed Ethernet switches, used by data centers and cloud services – controlling nearly 70 percent of that market.
     Arista, however, says it has developed a “revolutionary approach” to scalable high-speed Ethernet switches which Cisco has repeatedly tried to kill, according to the complaint.
     First, Cisco formed a “spin-in” called Insieme Networks to develop a line of products that Cisco CEO John Chambers called an “Arista killer,” the complaint says.
     When Insieme failed to stop Arista, Cisco turned to its customers’ networks – creating “a trap that locks them into purchasing only Cisco Ethernet switches, including high-speed Ethernet switches, and a pricing scheme that punishes Cisco customers by increasing the cost they must pay to maintain and service their network if they purchase from rivals,” Arista says in the complaint.
     “And customers are the ultimate losers, because they end up with a poorer alternative as a result of Cisco’s manipulation,” Arista says in the complaint.
     Arista is suing Cisco for violating the Sherman Act through unlawful and attempted monopolization, and unfair competition under California law. It seeks an order to end the anticompetitive conduct and treble damages.
     It is represented by Robert Van Nest of Keker & Van Nest in San Francisco.
     Arista suffered a setback in its fight with Cisco earlier this month, after an administrative law judge with the U.S. International Trade Commission ruled it violated three of Cisco’s patents for networking technologies.
     The full ITC must confirm the ruling.

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