Cisco’s $2 Billion Patent Trial Loss Nixed by Federal Circuit

The Federal Circuit vacated a $1.9 billion patent infringement verdict against Cisco Systems Inc. after finding that the judge who levied the penalty should have recused himself after learning that his wife had stock in the company.

Cisco and Centripetal Networks Inc. will go back to court before a new judge to litigate whether Cisco willfully infringed four of Centripetal’s cybersecurity patents. Judge Henry Morgan of the US District Court for the Eastern District of Virginia should have recused himself from the case after discovering his wife owned 100 shares of Cisco stock, the U.S. Court of Appeals for the Federal Circuit ruled.

Morgan originally awarded Centripetal $755.8 million, and then increased the damages 2 1/2 times after finding Cisco’s infringement was willful and “egregious.” With royalties, the total amount awarded exceeded more than $2.75 billion. The Federal Circuit panel during oral arguments was skeptical that the penalty against Cisco was enough to show that Morgan wasn’t biased.