$188 million reasons why a Cisco customer needs a patent and copyright infringement indemnity agreement with Cisco

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$188 million reasons why a Cisco customer needs a patent and copyright infringement indemnity agreement with Cisco

So what does a Cisco customer patent and copyright infringement indemnity agreement look like? Well below, is what Cisco's confidential patent and copyright infringement indemnity agreement with AT&T looks like (this confidential agreement was executed by the President of AT&T Procurement, Maureen Merkle and Cisco's Frank Calderoni):

New York City: Thu, 11/13/14 - 6:16pm View comments

Cisco's Q1'FY15 financial results (page 6) included a $188 million patent portfolio charge to settle Cisco's patent litigation with the Rockstar Consortium.

View Cisco's entire 38-page legal counterclaim against Rockstar.

Page 12 of the Cisco counterclaim clearly states:

29. At least twelve Cisco customers ("Known Accused Customers"), including TWC and Windstream, have given Cisco notice that Rockstar has accused them of infringement.

30. Cisco has agreements with each of the Known Accused Customers that specify conditions under which Cisco must indemnify them against claims of patent infringement for the use of Cisco products.

31. Each of the Known Accused Customers have asked Cisco for assistance and/or indemnification in response to Rockstar's claims of infringement.

So what does a Cisco customer patent and copyright infringement indemnity agreement look like?

Well below, is what Cisco's confidential patent and copyright infringement indemnity agreement with AT&T looks like (this confidential agreement was executed by the President of AT&T Procurement, Maureen Merkle and Cisco's Frank Calderoni):

20.0 PATENT AND COPYRIGHT INFRINGEMENT INDEMNITY.

20.1 The following terms apply to any claim, suit or proceeding brought against AT&T, so far as it is based on a third party Claim that any Product supplied hereunder, infringes: (i) an existing United States patent issued as of the Effective Date; or, (ii) a copyright valid in or patent issued as of the Effective Date by a member state of the European Union, Norway, Switzerland, Canada, Japan, New Zealand or Australia ("Claim"). Cisco will indemnify AT&T, its officers, directors, employees and agents, solely against final judgments entered in such a suit or proceeding by a court of competent jurisdiction and against settlements arising out of such a claim, suit or proceeding. Cisco's obligations specified in this section will be conditioned on AT&T notifying Cisco promptly in writing of the Claim or threat thereof and giving Cisco full and exclusive authority for and information for and assistance with the defense and settlement thereof, however, that Cisco may not, without the prior written consent of AT&T, settle or compromise any such claim, unless such settlement or compromise includes a full and unconditional release of AT&T from all liability arising out of such claim.

20.2 If a Claim has occurred, or in Cisco's opinion is likely to occur, AT&T agrees to permit Cisco, at its option and expense, either to:

20.2.1 procure for AT&T the right to continue using, or allow End Users to continue using the Product; or,
20.2.2 replace or modify the Product to make it a substantially similar, functionally equivalent, non-infringing Product.

20.3 In the event that neither of the foregoing alternatives is reasonably available, Cisco shall direct AT&T to return the Product to Cisco and Cisco shall refund AT&T the purchase price thereof as depreciated or amortized by equal annual amounts over the lifetime of the Product as provided by the depreciation life, but not more than five (5) years. Cisco shall reimburse AT&T the cost of removing such Product, including such Products used by End Users, subject to agreement on the amount of such cost in writing by Cisco prior to the removal of the Product.

20.4 Cisco shall not have liability for any claim against Cisco based upon: (i) the combination, operation or use of any Product supplied hereunder with equipment, devices or software not supplied by Cisco; (ii) services offered or used by AT&T through operation of the Products or revenue received by AT&T from its services; (iii) alteration or modifications of any Product supplied hereunder; or, (iv) AT&T's or End User's use of Products as shipped after Cisco has informed AT&T of modifications or changes in the Products required to avoid such claims and offered to implement those modifications or changes if such claim would have been avoided by implementation of Cisco's suggestions.

20.5 AT&T shall indemnify, defend and hold Cisco harmless against any expense, judgment or loss for all alleged infringement of any patents, copyrights, or trademarks which result from Cisco's compliance with mutually agreed to AT&T-requested designs, specifications or instructions.

20.6 Cisco shall not be liable for any claim based on AT&T's use of the Products as shipped after Cisco has informed AT&T of modifications or changes in the Products required to avoid such claims if such claim would have been avoided or reduced by implementation of Cisco's suggestions.

20.7 THE FOREGOING STATES THE ENTIRE OBLIGATION OF CISCO AND ITS SUPPLIERS WITH RESPECT TO INFRINGEMENT OF INTELECTUAL PROPERTY. THE FOREGOING IS GIVEN TO AT&T SOLELY FOR ITS BENEFIT AND IN LIEU OF, AND CISCO DISCLAIMS, ALL WARRANTIES OF NON-INFRINGEMENT WITH RESPECT TO THE PRODUCTS.

To reiterate: Cisco's customers have $188 million reasons to make sure they have a a patent and copyright infringement indemnity agreement with Cisco!

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