The $6 Million Cisco Verdict: A Landmark Shot Against Channel Bullying
In a landmark case, a California Superior Court jury ruled against Cisco and awarded Infra-Comm, a San Juan Capistrano, Calif. award winning Cisco partner, every cent in damages the solution provider had demanded in the breach of contract suit.
The jury found that Cisco violated its reseller agreement and deal registration agreement by cutting Infra-Comm out of a registered deal and instead passing it to telecommunications giant AT&T. The verdict was reached on Monday after less than three hours of deliberations by the 12-person jury.
That ruling came after Superior Court Judge Gregory Lewis ruled that a number of clauses in Cisco's Indirect Channel Partner Agreement (ICPA) are "unconscionable" as in not guided by conscience. In other words, unreasonable and shameful.
You could almost hear the collective cheer among Cisco partners who have been bullied time and time again by the networking leader that likes to send the message into the sales trenches that those partners that don't walk the Cisco line will pay and pay dearly. Cisco, by the way, has long been regarded as one of the biggest vendor bullies when it comes to throwing down the "my way or the highway" card. Within the Cisco mid-level channel sales trenches it is a Cisco giveth and Cisco taketh away ethos.
That said, let's get this straight. Cisco isn't the only big vendor that engages in these "my way or the highway" tactics. Cisco is just the most notorious schoolyard channel bully. Those looking for data on just how Cisco is viewed in the channel would be wise to check out an Everything Channel study that showed 60 percent of solution providers polled feared loss of dealer status by the primary vendor if they picked up an alternative vendor. And guess who won the award for the vendor most likely to take retaliatory action? Bingo. You guessed it: Cisco.
Cisco partners, who did not want to be identified, by the way, cheered Infra-Comm. They hope that the verdict gets Cisco CEO John Chambers, a big channel proponent, to look long and hard at just what kind of bullying is taking place in the sales trenches.
"Cisco more than anybody else, in my view, expects you, the partner, to be monogamous," said one VAR 500 Cisco solution provider. "But they can do whatever they want. They have a problem if you deal with other products. Maybe this is the end of the Czars. I hope (Cisco CEO John) Chambers talks candidly to the broad partner community about this without it being filtered through his organization. He needs to find out what is really going on. Cisco is so egocentric that they can't understand how to really collaborate. It's reflected not only in their contracts but how they conduct business at street level."
"This is the first piece of encouraging news I have seen around this subject," said the Cisco partner. "It looks like maybe the tide is starting to turn where we can expect to have a true partnership rather then have these vendors bullying partners."
The solution provider termed the Cisco relationship and other large vendor partnerships a one way street. "They all live on a one way street," he said. "I hope vendors start to wake up and realize that these relationships need to be more balanced and start work towards actually doing that. You need to be collaborative. You need to work together. You have got to invest in developing a relationship with business partners such that it is good for everybody. I'd hate to be subject to the letter of any of these vendor contracts because they can do just about anything to you they want. They can you put out of business."
Solution providers long subjected to such abuse hope the landmark ruling against Cisco will help to change those one-sided agreements and the bullying in the sales trenches. Those vendors that think they can get away with such one-sided agreements and bullying would be wise to consider not only the $6 million award to Infra-Comm, but the damage to Cisco's image as a result of the verdict.