Cisco Systems, Inc.
) inked a 10-year patent cross-licensing agreement with Samsung
Electronics. The deal was described as a "cross-licensing
agreement covering a broad range of products and technologies."
which will come into effect immediately. However, the financial
terms of the deal have not been disclosed.
Earlier this week, Cisco entered into a similar deal with
) and just before that Google and Samsung entered into a 10-year
cross licensing patent deal. With the growing number of
litigations, such cross-licensing patent deals avert the risk of
unnecessary lawsuits and instead enable companies to focus on
building new products.
Lawsuits are a costly affair as it not only hurts company
financials but also negatively impacts a brand. It is therefore
sensible and cheaper to enter license agreements and sell more
devices minus the fear of getting sued.
Per the recent agreement, both Cisco and Samsung will be able
to access each other's patent portfolios. The agreement is
intended to oppose the patent deals of other firms that have
engaged in "patent privateering."
At times, technology companies transfer their patents to a patent
assertion entity, which is not bound by the same laws and is
therefore able to extract bigger licensing fees from competitors.
These entities, or patent trolls as they are called, engage in
significant litigation that wastes time and money of the
competitors. This process is referred to as privateering.
Cisco is a part of an alliance called the Coalition for Patent
Fairness that seeks to minimize litigation between technology
companies and thereby devote more energy to innovation. Google,
Samsung, Dell and
) are other major players that have joined this coalition.
The coalition appears to be a direct attack on tech firms that
are part of the Rockstar Consortium, including
) that are involved in multiple patent litigations.
For Cisco, its focus on cross-licensing comes after a number of
high-profile fights against shell companies that abuse the patent
system whereas this is Samsung's third cross-licensing deal this
Cisco, a San Jose-based company founded in 1984, designs,
produces and sells Internet Protocol (IP)-based networking
equipment to the information technology industry worldwide.
Currently, Cisco holds a Zacks Rank #4 (Sell).
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