A $6 million judgment against Cisco Systems in which a jury found that the networking vendor violated its reseller agreement and deal registration program with a small solution provider has other VARs wondering how this might impact their relationships with Cisco and other vendors.
Now Cisco is ready to talk about the case, in which it was successfully sued by a former solution provider, Infra-Comm, and ordered by an Orange County, Calif. jury to pay damages.
Bill Friedman, senior corporate counsel for Cisco, who was often seen sitting in the audience chairs during the trial, discussed how the case could impact the channel in e-mailed responses to questions from ChannelWeb, questions which were also answered Tuesday by Infra-Comm's attorney, Brian Daucher.
What impact will Infra-Comm's $6 million jury award against Cisco have on major vendor deal registration and reseller agreements?
We're extremely proud of the proven, long-term success of our channel programs, and we do not believe this ruling has broader implications on agreements with channel partners. By their very nature, breach-of-contract cases are fact-based and specific. This case involved one contract and one reseller.
Also, our channel philosophy is to listen to our partners and address their needs. Cisco is well known for listening to our partner community and designing programs - and implementing modifications to our programs - that make sense. If our channel community tells us they need changes to improve their business then we take action.
What is the message that the jury is sending to big vendors regarding deal registration and reseller agreements?
Our standard contract terms were designed to drive efficiency and make it easier for our partners to do business with us and vice versa. And while we cannot speak for the jury, we have made many changes and improvements to these terms in the past based on partner and customer feedback, and we will continue to do so moving forward. Cisco always strives to improve process and drive success for the company, our partners and our customers.
What impact will the legal precedent set here have with regard to deal registration and reseller agreements?
From a legal perspective it should have no impact. We do not believe that any precedent was set with this ruling as the facts are specific to only this case.
What is your view of Cisco and how it treats its partners?
We are proud of the strong relationships we have with our more than 60,000 channel partners, and our partners seem to agree. With more than 80% of our revenues flowing through the channel, our past, present and future success is intimately linked to our partners.
We regularly meet with partner executives from around the world, and they tell us we're one of the best in the industry at partnering to drive mutual success. Recent third-party polls of our partners also show that partner satisfaction and partner loyalty is at an all time high. Finally, we continue to win industry accolades for our innovative technology and channel programs. For instance, Cisco recently won four VAR Business ARC awards, significantly more than any other vendor.
Do you expect Cisco to appeal the verdict?
We have always worked very hard to find a healthy balance between serving and supporting the needs of our partners and those of our customers. In this particular case, the end-user customer ultimately decided which solution provider to work with when deploying their Cisco solution, and we did our best to support their decision.
While we respect the jury's verdict, we disagree with it and are considering all options including an appeal.
Do you think Cisco will pay the $6.4 million award?
Again, we are still considering all of our options including an appeal, and no decision has been made at this time.
