Cisco And A Former VAR Square Off In Court

Cisco's channel partner loyalty is being questioned in a lawsuit being heard in a jury trial in Superior Court of Orange County in Santa Ana, Calif., in which a former Cisco Silver-level solution provider alleges Cisco breached terms of its channel partner agreement and deal-registration program.

The solution provider, Infra-Comm, of San Juan Capistrano, Calif., claims Cisco breached its Indirect Channel Partner Agreement (ICPA) and the terms of its deal registration program when it passed on a potential large deal with the Irvine Company to AT&T. Infra-Comm alleges that Cisco passed the customer to AT&T despite Infra-Comm's long-term development of the opportunity and its registering of the deal with Cisco.

Networking and IP telephony vendor Cisco, in return, claims Infra-Comm has harmed Cisco's business and misused its brand name.

In its lawsuit, Infra-Comm said it had registered the Irvine Company deal under Cisco's deal registration program, which was supposed to ensure that other solution providers could not take that deal with the same discount offered under the program. Infra-Comm also said in the lawsuit that Cisco breeched the provisions of its Indirect Channel Partner Agreement.

Infra-Comm also said that in 2003 it found a potential deal for Cisco with the customer worth a potential of $3 million in IP telephony equipment.

Infra-Comm registered that deal with Cisco in July of 2005, and was granted a six-month registration on December 11, 2005. It re-registered the deal two weeks before it expired, and on June 6, 2006, was told by a Cisco representative that the re-registration "would be taken care of" that week.

But in late July, Infra-Comm learned that the deal had not been registered, and that Cisco had passed the deal to AT&T with the same pricing that Infra-Comm was offered, Infra-Comm says.

Despite filing the lawsuit in January of 2007, Infra-Comm continued to register deals with Cisco, and in late May renewed its Indirect Channel Partner Agreement (ICPA) with Cisco.

Infra-Comm quickly received an automated response from Cisco confirming that the ICPA was renewed, but Cisco shortly thereafter said the response was not valid, and within days it canceled Infra-Comm's ICPA.

Cisco in August of 2007 filed an amended cross-complaint against Infra-Comm, alleging that Infra-Comm breeched an agreement under which Infra-Comm provided Cisco Remote Operating Services (CROS) to the Irvine Company, and that Infra-Comm never paid Cisco for about $100,000 worth of management services provided to the customer.

Cisco also accused Infra-Comm of intentionally interfering with Cisco and its CROS business by blaming Cisco for the customer's dissatisfaction with the service and diverting that CROS business to itself at Cisco's expense

The networking company also accused Infra-Comm of illegally profiting from unauthorized use of the Cisco brand name and of breeching the terms of the Cisco ICPA by its unauthorized use of the Cisco brand name.

Cisco referred to the case as "an unfortunate example of a company desperate to do anything—other than invest in its own business and compete fairly—to further its own gain and enhance its position."

Cisco also said that Infra-Comm's slow business growth diminished its ability to serve the customer, and that Infra-Comm actually took the CROS deal from another reseller and promised to detailed monthly reports that were not possible to do with CROS. Because of that, Cisco said, the customer was dissatisfied with the service, despite Cisco's efforts to help provide the reports promised by Infra-Comm.

Cisco said Infra-Comm blamed the problem on Cisco. Infra-Comm then replaced CROS with its own services offerings and refused to pay Cisco for some of the CROS services, Cisco said.

Cisco asked Superior Court Judge Gregory H. Lewis to disallow the use of the word "partnership" in reference to the relationship between Cisco and Infra-Comm, saying that the word may carry certain legal meanings outside of the vendor-reseller relationship, and that it could be confusing to the jury. Lewis denied the motion, and both sides agreed to work out a definition of the word for the jury.

The trial is expected to last as long as two weeks.