Cisco Verdict: An End To Terms Of Surrender

I write this as a warning to the world. Or at least to all those vendors that count on solution providers for the bulk of their business. Don't play games with solution provider contracts.

We at Everything Channel have been saying that for more than 20 years. Now, a jury in Southern California has weighed in, saying that Cisco violated some terms of its reseller contract. The jury slapped the vendor with a judgment in excess of $6 million.

The jury's swift verdict came Monday in a lawsuit filed by Infra-Comm, a San Juan Capistrano, Calif.-based solution provider. Infra-Comm alleged that Cisco breached its ICPA and terms of its deal-registration program by passing a potential large deal it had first registered over to AT&T. Earlier, the presiding judge in the case, California Superior Court Judge Gregory Lewis, ruled that parts of Cisco's reseller contracts are "unconscionable."

This is the wake-up call for vendors. Forget about precedents. Forget about waiting for any Cisco appeal. Don't fight a losing battle.

The old world of vendors dictating terms of the relationships with solution providers are over. If vendors want to survive this economic downturn and prosper in the future, solution provider contracts must reflect mutual respect for each other's businesses.

In the bygone era of IBM medallions and closed distribution, vendors could get away with these onerous, one-sided contracts. Those days are long gone and this Southern California jury verdict is just the final exclamation point.

Solution providers now choose from a plethora of vendor technologies and products to craft the best possible solutions for their customers. And let me say this again: solutions. Vendors that cling to reseller contracts that were crafted for the bygone world of point-product sales are toast.

So, give a shout out to the jury. Kudos to the judge. And a standing ovation to Infra-Comm President Luke Hosinski who had the courage and determination to take his righteous indignation to court.

And a word to vendors: Have your lawyers rewrite your solution provider contracts to reflect mutual respect and fairness, not terms of surrender.