Cloud competitor cases are definitely on the rise over the past year. We’ve seen patent infringement lawsuits from established cloud players such as Symantec, BMC Software and Citrix against their emerging cloud competition, sometimes spurred by executive ship-jumping. And we’ve seen the opposite – such as cloud upstart Centripetal Networks laying nearly its entire patent portfolio on the line in taking on networking giant Cisco. But it’s not just the major cloud players involved in cloud competitor patent lawsuits. Mid-tier cloud companies are also battling it out with their patent portfolios. Case in point – Ribbon Communications (created in 2017 when Sonus Networks and Genband merged) is aggressively enforcing its patent portfolio against Metaswitch Networks. Ribbon and Metaswitch compete in the cloud communications space. Ribbon provides secure real-time communications solutions to transform fixed, mobile and enterprise networks from legacy environments to secure IP and cloud-based communications architectures. Metaswitch touts itself as the world’s leading cloud native communications software company, and provides a portfolio of cloud native communications software solutions for mobile, fixed and converged networks.
Ribbon’s patent campaign against Metaswitch has a somewhat complicated history, starting with an infringement lawsuit filed in January 2014 under the case name Genband US v. Metaswitch Networks. Genband (Ribbon’s predecessor) asserted its patents against Metaswitch’s Perimeta Session Border Controller, a cloud native carrier-class virtualized SBC, as well as several other Metaswitch products. By today’s patent litigation success standards, Genband fared extremely well in that lawsuit. However, not satisfied with an $8.8 million royalty award after trial in January 2016, which was upheld on appeal and remand, Ribbon (as Sonus Networks) filed two more lawsuits against Metaswitch on March 8, 2018, in the Eastern District of Texas. Collectively Ribbon has asserted infringement of ten more patents against Metaswitch, on top of the seven patents that Metaswitch was found to infringe in 2016.
These two new lawsuits come on the heels of the Eastern District’s second denial of a permanent injunction sought by Ribbon (as Genband) against Metaswitch. While Genband scored a clean sweep victory at trial in 2016 on infringement resulting in the $8.8 million judgment, the Eastern District denied Genband’s request for a permanent injunction, finding that Genband had not established that it would suffer irreparable harm because of Metaswitch’s continued infringement. Genband appealed the denial of permanent injunction and argued that the Eastern District failed to apply the correct standard for determining causation of irreparable harm. The Court of Appeals for the Federal Circuit agreed with Genband, vacated the denial of permanent injunction, and remanded back to the Eastern District to undertake application of the proper causation standard for irreparable harm (see Genband US LLC v. Metaswitch Networks Corp. (Fed. Cir. 2017)). On March 22, 2018, taking the Federal Circuit’s decision into consideration, Judge Gilstrap issued an Order again denying a permanent injunction against Metaswitch, but did award substantial ongoing royalties to Genband on Metaswitch’s accused products in addition to the $8.8 million damages award. However, Judge Gilstrap also found that those ongoing royalties would not be assessed against Metaswitch’s redesigned products. Presumably Ribbon anticipated that it would have no injunction in hand and no ongoing royalties against Metaswitch’s redesigned products, so it filed the two new lawsuits even before Judge Gilstrap issued his Order.
In the Complaints in its latest lawsuits, Ribbon touts its two decades of leadership in real-time communications and its portfolio of products built on world-class technology and intellectual property that is available for deployment in-network or in virtualized cloud environments. Ribbon’s asserted patents generally relate to telephony gateways, call routing between PSTNs and IP networks, inhibiting softswitch overload, network management system interfaces, and network traffic classification and grouping. Ribbon alleges infringement against Metaswitch’s Perimeta Session Border Controller, MetaView Network Management System, SIP Provisioning Server, and CommPortal in one lawsuit, and Metaswitch’s Integrated Softswitches, Universal Media Gateways, and Metaswitch Telephony Application Server in the other lawsuit. Ribbon’s infringement allegations of the ten accused patents are reasonably detailed and straightforward, but Ribbon makes no reference to the prior litigation. As expected, Ribbon seeks an award of damages, including triple damages for alleged willful infringement, as well as a permanent injunction. Metaswitch’s Answer or other response to both Complaints is due on April 30, 2018.
Ribbon’s ongoing litigation against Metaswitch is a prime example of a cloud computing company turning to its patent portfolio to fend off competition and stake out its market position. It’s particularly interesting that a mid-tier cloud company like Ribbon with annual revenues of $330 million and a net loss of $35 million in its FY17 would wage a multi-year, multi-million dollar patent war against another mid-tier cloud competitor. Additionally, Ribbons’ FY17 Q4 earnings release includes a statement on litigation costs, and indicates that it expects to incur “significant future litigation costs.” Based on its litigation track record and its public statements to investors, it seems highly likely that Ribbon will take this latest patent litigation the full distance against Metaswitch.