The winner of many corporate lawsuits is predetermined. From the moment complaints are uttered and court papers filed, the real winners often are the lawyers handling the case. And the long-simmering next-generation firewall patent disputes between Juniper Networks Inc. and Palo Alto Networks may prove this axiom true, yet again.
The patent infringement lawsuit lodged by Juniper Networks against its upstart rival two years ago will finally go to trial in February 2014. At issue: whether Palo Alto Networks founder Nir Zuk used technology owned by Juniper to start the next-generation firewall vendor.
Palo Alto Networks isn’t taking this lying down. It’s filed countersuits alleging Juniper Networks — considered a leader in the security appliance market but laggard in next-generation firewall technology — infringed on its intellectual property.
While Juniper hoped to blunt Palo Alto Networks’ growth, the allegations have had little impact. Since the first complaint was filed in December 2011, Palo Alto Networks has changed out its management team, expanded its channel sales and executed its IPO. The company is now one of the strongest security companies on the market with a valuation topping $4 billion.
Juniper Networks, on the other hand, has been riding a series of highs and lows. It’s been under increasing competitive pressure from rivals, most notably Cisco Systems Inc., in its core and telecom routing products. It’s experienced a near-complete switch out of its channel management team, seeing the departures of Frank Vitagliano (went to Dell Inc.), Steve Pataky (FireEye Inc.) and Donna Grothjan (Hewlett-Packard Co.), and recently appointed a new CEO, Shaygan Kheradpir, to replace the departing Kevin Johnson. There have been reports that Juniper considered selling its security assets.
The roots of this lawsuit goes back to Juniper’s 2004 acquisition of NetScreen Technologies, which was a pioneer in the advancement of firewall technology. The deal propelled Juniper into the security market, giving it assets to compete against the likes of Cisco and Check Point Software Technologies. At the time, Zuk was NetScreen’s chief technology officer and had previously worked at Check Point and startup OneSecure. In 2005, Zuk left Juniper to start Palo Alto Networks and, arguably, the next-generation firewall market.
What makes next-generation firewalls different is application awareness. Conventional firewalls inspect traffic for malicious activity at the protocol level. By blocking TCP or UDP ports, firewalls control what flows in an out of a domain. Firewall effectiveness limits hackers and malware to tunnel through ports for which they’re not designated, thus defeating a firewall. Next-generation firewalls inspect traffic for what it does, not just what it says it does, improving the effectiveness of the appliance as a perimeter security measure.
Juniper alleges Zuk and former engineer Yuming Mao used at least six patented NetScreen technologies in the development of Palo Alto Networks’ products. Chief among the patents in dispute is “Method and Apparatus for Implementing a Layer 3/Layer 7 Firewall in an L2 Device,” which Mao invented.
Palo Alto Networks last September filed a counter complaint, alleging Juniper is in violation of three of its patents.
The wheels of justice in patent lawsuits turn slowly, and it often takes years to process and resolve such cases. In that time, much can happen that negate or blunt the impact the original complaint had sought to inflict, as shown in several recent high-profile cases.
After more than two years of legal battles, A10 Networks conceded defeat to Brocade Communications over application acceleration technology. While A10 had to pay damages to Brocade, it had already developed superseding technology that replaced the products in dispute. The measurable impact was negligible.
After nearly two years of bitter fighting in court, HP won the case that forced Oracle Corp. to support software for Integrity servers running on Intel’s Itanium processor. Damages were paid and support resumed, but Oracle ultimately won the war. HP’s high-end server line was so damaged by the dispute that it’s now shifting customers to x86-based servers.
And after nearly four years of legal wrangling and appeals, Oracle prevailed over SAP, which was found liable for improperly downloading copious amounts of Oracle intellectual property. Initially, SAP was ordered to pay $1.3 billion in damages. The amount was later reduced to $272 million. The final settlement was for $306 million. While not a paltry sum, neither company was particularly damaged by the lawsuit. However, Oracle sales have been relatively flat since the settlement, while SAP is surging.
The final outcome of the Juniper-Palo Alto lawsuit may be little more than a meaningless settlement. Palo Alto Networks has grown big enough to withstand a major judgment. Moreover, partner confidence in Palo Alto Networks continues to grow as it operates one of the best channel programs in the business. Juniper, on the other hand, will profit little from a victory and lose little in a loss, as the remediation of infractions won’t make much of a difference in its market position.
In the end, the Juniper-Palo Alto may prove Shakespeare wrong. Rather than “The first thing we do, let’s kill all the lawyers,” as the bard wrote in Henry VI, this lawsuit will reinforce the legal axiom, “First thing you do is pay all the lawyers.”
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