Cisco Escapes Jilted Tech Partner's $70 Million Jury Verdict

, The Litigation Daily

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Lawyers at Quinn Emanuel Urquhart & Sullivan and Morgan, Lewis & Bockius have helped Cisco Systems Inc. escape a $70 million jury verdict in a battle with XpertUniverse Inc., a tech start-up whose partnership with Cisco soured in the mid-2000s.

A Delaware jury awarded XU $70 million in damages in March after a nine-day trial, finding Cisco liable for fraudulent concealment. The jury gave XU an additional $33,000 in damages for Cisco's infringement of two of its patents on methods for putting businesses in touch with call center experts.

On Wednesday, U.S. District Judge Richard Andrews in Wilmington swept nearly the entire verdict away. The judge dismissed XU's fraudulent concealment claims in a 33-page decision, partly granting Cisco's motion for judgment as a matter of law.

The lion's share of the jury's damages award stemmed from XU's contention that Cisco decided in mid-2006 that XU's technology wouldn't be included in its program to market third-party services to clients. According to XU, Cisco concealed that the company's bid for inclusion in the program was "denied" until January 2007. But Judge Andrews found there was no material difference between Cisco informing XU that it had not been approved, which it did in April 2006, and telling XU it had been denied.

"For XU to prove the materiality of the concealment of the 'denial' for nine months, the factfinder must infer that, had XU been told it was denied in April 2006, XU would have withdrawn from the active relationship with Cisco, and would have sought to resuscitate defunct relationships with IBM and Genesys," Andrews wrote. "There is no evidence that XU would have done so."

Andrews also ruled that XU hadn't established that Cisco's alleged misconduct caused its losses. An XU expert had testified that the company was worth $70 million before Cisco's concealment and worth nothing afterward.

The judge did deny Cisco's motion to knock out the jury's findings on patent infringement, however, leaving XU's $33,000 in patent damages in place. Cisco's lawyers had argued that XU's infringement claims were undermined by inequitable conduct before the U.S. Patent and Trademark Office.

Morgan Lewis handled the case for Cisco at trial with local counsel from Morris, Nichols, Arsht & Tunnel. The company brought in Quinn Emanuel to assist with posttrial briefing and presumably to spearhead an appeal. Quinn Emanuel's Kathleen Sullivan referred us to a Cisco spokesperson when we reached her on Thursday. The company provided the following statement: "The judge's decision speaks for itself. Cisco did nothing wrong in its dealings with XpertUniverse, and we are gratified that this has been recognized by the court."

Stroock Stroock & Lavan represented XU at trial along with Susman Godfrey name partner Stephen Susman and local counsel at Potter Anderson & Corroon. Stroock withdrew from the case after posttrial briefing and counsel from Holwell Shuster & Goldberg and Finnegan, Henderson, Farabow, Garrett & Dunner have since joined the case for XU.

Finnegan's Donald Dunner told us Thursday it was "premature" for him to comment on the judge's decision, but that he would be handling XU's appeal.

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