SAN FRANCISCO — Arista Networks is lashing back at a suit filed earlier this month by one of the company’s cofounders, calling it a “Hail Mary” attempt by Silicon Valley billionaire David Cheriton to rejuvenate his private software company.
Cheriton, a Stanford computer engineering professor, helped found Arista in 2004 with longtime business partner Andreas Bechtolsheim. That same year Cheriton launched Optumsoft Inc. and the two companies entered a licensing agreement allowing Arista, a supplier of cloud networking solutions, to employ Optumsoft’s proprietary software development tool.
Optumsoft sued Arista for allegedly breaching the agreement April 4, a week after Arista filed for an initial public offering.
“This case involves an all too common scenario,” Arista’s lawyers argue in a heated cross-complaint. “A successful company about to go public (Arista) sued by a failing company seeking a Hail Mary to rescue it (Optumsoft).”
Cheriton is Optumsoft’s director, majority shareholder and sole investor, according to Arista’s cross-complaint. For years, the two companies had offices in the same building and Cheriton served on Arista’s board of directors until March 1. Now the sister companies are facing off over who owns components of Arista’s network operating system developed using Optumsoft software.
In Arista’s corner are Wilson Sonsini Goodrich & Rosati partners Colleen Bal and Charles Graves. Optumsoft, which accuses Arista of distributing source code to its customers without authorization and otherwise transgressing on Optumsoft’s IP rights, is represented by Daralyn Durie and Ragesh Tangri of Durie Tangri.
Arista’s cross-complaint filed Monday in Santa Clara County Superior Court accuses Cheriton of contriving ownership claims to disrupt Arista’s IPO. “Optumsoft timed the lawsuit to take advantage of Arista during this period to try to exert unjustified pressure, untethered to the merits of the dispute,” the complaint alleges.
Arista has known litigation was an option at least since November, when the company received a letter from Optumsoft asserting ownership rights over certain Arista software components.
If Optumsoft believed it owned portions of Arista’s software, it should have said so years ago, the Wilson Sonsini attorneys argue. Instead, Optumsoft repeatedly confirmed Arista owned the components in question, according to the cross-complaint.
Optumsoft asked Arista to grant a third-party license for the components, the cross-complaint alleges, which would not have been necessary if it owned the software. And while Optumsoft placed copyright notices on other software it manufactured, it did not place notices on Arista’s components, the cross-complaint states.
The lawsuit boils down to jealousy, Arista’s lawyers argue.
“Arista’s success stands in marked contrast to Optumsoft’s lack of progress,” the cross-complaint states. “Optumsoft never expended significant resources to develop or market its own business. … And it has enjoyed almost no success or recognition.”
Arista’s counsel and a spokeswoman for the company declined comment. Lawyers at Durie Tangri were out of the country and could not immediately be reached by email.
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