Cisco is preparing to dole out a serious chunk of cash to settle its patent lawsuit with Rockstar, a patent-holding company created out of the ashes of Nortel, a Canadian telecom.
The $188-million pre-tax charge was revealed in CIsco's most recent earnings call, and first reported on Monday by the IAM Blog.
Rockstar, which was created by a group of big tech companies including Apple, first sued Google and its customers in October 2013. In January, it sued several cable companies, saying their cable modems infringed Rockstar patents by using the DOCSIS standard. Cisco intervened in that case the following month.
The charge and reference to a "term sheet" suggests an impending settlement between Cisco and Rockstar. Cisco has asked the judge to stay the litigation because it has signed a "term sheet" with Rockstar.
The forthcoming settlement will likely cover not only Cisco but its customers who had received letters from Rockstar asking for patent royalty payments. At least a dozen ISPs approached by Rockstar were using Cisco products, including Time Warner Cable, Windstream, Suddenlink, Knology, and Cable One.
In its most recent 10-K filing, Cisco said one of its customers was scheduled for trial in October 2015.
The "Rockstar Consortium" was formed in 2011, when five tech companies—Apple, Microsoft, Blackberry, Ericsson, and Sony—banded together to outbid Google for the Nortel patent portfolio. They paid $4.5 billion.
Apple owns a large share of Rockstar and has a seat on the company's board of directors. Rockstar CEO John Veschi has said that he, not the board of directors, calls the shots.
But a federal judge found a "direct link" between Apple's business interest and Rockstar's lawsuit against Google, given that the two are fierce competitors in the smartphone market. She moved that lawsuit from Texas to California, in part because of the link to Apple.
A Cisco spokesperson declined comment beyond the comments made in the investors' call.
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