In a preliminary ruling, the California Superior Court, Santa Clara County found that OptumSoft, a company started by Arista co-founder David Cheriton, does not own Arista code developed to work with royalty-free licensed software. That software is OptumSoft’s TACC -- Types, Attributes and Constraints Compiler -- a platform for developing modular or distributed applications or systems, a key functionality Arista markets as a differentiator for it EOS operating system software.
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A royalty-free licensing agreement reached years ago between the companies involved OptumSoft’s ownership of “improvements, corrections or modifications to” TACC, and “derivative works thereof, made by or for.” Arista developed the EOS SysDB system database, and routing and switching acceleration software called “Smash” using the TACC compiler.
A disagreement ensued between Arista and OptumSoft over ownership of SysDB and Smash. Cheriton sued in 2014 for breach of contract, misappropriation of trade secrets and declaratory relief; Arista countersued shortly thereafter, claiming EOS code developed using TACC tools was not licensed from OptumSoft.
This week, the court found that the scope of OptumSoft’s interpretation of the ownership agreement was too broad.
“OptumSoft’s interpretation of the agreement would impose obligations on Arista which were not bargained for or agreed to when the agreement was entered into,” wrote Judge Peter Kirwan. “OptumSoft’s broad interpretation of the scope of the ownership provision is simply not supported by the language of the agreement or by the subsequent conduct of the parties in the years that followed.”
The court ruled that the language of the ownership and licensing agreement did not include terms advocated by OptumSoft in its litigation, including “complementary,” “functionality,” “TACC-related,” “extensions,” “additions,” “software development platform” and “application specific.”
“To the extent that Dr. Cheriton wanted the term ‘improvement’ to apply as broadly as he now contends, it was incumbent upon him to make that clear in the language of the agreement,” Judge Kirwan wrote. “Under the present facts and circumstances, expanding the scope of the term ‘improvements’ as suggested by OptumSoft in the absence of more clear and explicit language is not justified.”
"We are pleased with Judge Kirwan's proposed statement of decision and appreciate the Court’s hard work in this case," said Marc Taxay, vice president, general counsel for Arista. "Arista is gratified that the Court recognized Arista’s ownership of code it worked so hard to build into its operating system and remains committed to pioneering innovations in EOS."
A message seeking comment was left on OptumSoft’s voicemail system. OptumSoft still has the misappropriation of trade secrets claim pending against Arista.