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Cisco wins reversal of damages award because judge’s wife owned stock

Posted On: Jun. 23, 2022 11:25 AM CST


(Reuters) — A U.S. appeals court on Thursday threw out a more than $2.75 billion award against Cisco Systems Inc., saying the trial judge should have disqualified himself after learning that his wife owned Cisco stock.

The 3-0 decision by the U.S. Federal Circuit Court of Appeals was also a defeat for Centripetal Networks Inc., a Virginia company that had sued Cisco for damages and royalties for allegedly copying five cybersecurity patents.

The trial judge, U.S. District Judge Henry Morgan in Norfolk, Virginia, found Cisco liable for patent infringement in October 2020, two months after learning that his wife owned 100 Cisco shares worth $4,688.

Judge Morgan later put the shares in a blind trust and told the parties that the shares “did not and could not have influenced” his handling of the case.

But the appeals court said a blind trust was not the same as selling the shares, and it didn't matter that San Jose, California-based Cisco had lost.

The court ordered the case reassigned to another judge.

“It is seriously inimical to the credibility of the judiciary for a judge to preside over a case in which he has a known financial interest in one of the parties and for courts to allow those rulings to stand,” Circuit Judge Timothy Dyk wrote.

Centripetal's lawyers did not immediately respond to requests for comment. Cisco and one of its lawyers declined to comment.

Judge Morgan had ruled for Herndon, Virginia-based Centripetal after a non-jury trial in May and June 2020.