December 18, 2019
Cisco Systems won a temporary injunction against four Chinese companies the company accused of counterfeiting its transceivers. Filed in federal court in the Eastern District of New York, the suit said the fake gear threatened U.S. national security and health systems because they were not secure and would fail more often. The transceivers are used in networks to pass data through corporate data centers, hospitals and military bases. The injunction will force Amazon and Alibaba Group Holding to cease sales of the phony equipment.
The Wall Street Journal reports, “Cisco is trying to use the ruling to galvanize other suppliers to build an industrywide effort to curb counterfeit sales.” The judgment handed down targeted four Chinese manufacturers: Shenzhen Tianheng Network, Gezhi Photonics Technology, Shenzhen Sourcelight Technology, and Dariocom.
According to Rowan TELS Corp., a San Francisco-based consultancy that helps companies battling counterfeit products, “the four Chinese companies account for more than half of the counterfeit transceiver market.”IHS Markit stated that the global transceiver market is estimated at nearly $7 billion in 2018; “counterfeit experts say fakes can account for 5 percent or more of tech equipment sales.”
In addition to freezing counterfeit Cisco products on Alibaba, Amazon and eBay, “the ruling also freezes assets owned by the Chinese companies.” The counterfeiting of Cisco products goes back at least to 2003, when the company sued Huawei for copying its router software. Although the patent-infringement suit was dropped the following year, Huawei “admitted some software was apparently copied from Cisco.”
In 2010, the Justice Department and the Department of Homeland Security “seized $143 million worth of counterfeit Cisco networking gear manufactured in China.” In this most recent case, “Cisco engineers tested transceivers from the four companies and determined they were counterfeit.”
Cisco’s lawyers “said they expect a permanent injunction against the four Chinese companies to be handed down soon.”
“We welcome the news that China will strengthen intellectual-property protections in the country,” said Cisco general counsel Mark Chandler, referring to China’s pronouncement ahead of trade talks with the U.S. “We have worked with Chinese authorities over the years to raid facilities and shut down counterfeiters.”