Partner Agreements At Heart Of Cisco, Infra-Comm Court Case

A trial between Cisco and one of its former solution providers over allegations of breached deal registration and reseller contracts opened Wednesday in Superior Court of Orange County in Santa Ana, Calif. with attorneys for both companies making opening arguments to the jury.

Infra-Comm, a San Juan Capistrano, Calif.-based solution provider, alleges Cisco breached its Indirect Channel Partner Agreement (ICPA) and the terms of its deal registration program by passing a potential large deal with the Irvine Company, a property development company, to AT&T. Networking and IP telephony vendor Cisco, in return, is accusing Infra-Comm of harming Cisco's business and misusing its brand name.

In opening arguments, Infra-Comm's attorney, Brian M. Daucher, started with an analogy to explain the relationship between Infra-Comm and Cisco before outlining the investment Infra-Comm made with Cisco and the customer and how Cisco breached its contracts with Infra-Comm.

Daucher compared Infra-Comm to a fisherman who buys a ticket on a deep-sea fishing boat, hooks a fish, and spends five hours reeling it in, only to have the captain of the boat, or Cisco in this case, tap him on the shoulder and say he has to give the fish to that person over there. "You say, 'Why?'" Daucher said. "He throws you overboard."

Daucher showed how Infra-Comm had made a huge investment in time and resources in its Cisco relationship, and was recognized by Cisco as a competent partner, gaining silver partner status and numerous specialized certifications including one in unified communications.

Daucher then outlined how Cisco's dealer registration program, called the Cisco Opportunity Incentive Program, was supposed to protect partners who develop new opportunities and provide them special pricing to help close deals, and showed a Cisco document which warned Cisco reps in bold, all-capital letters, "DO NOT PROVIDE EQUAL SPECIAL PRICING TO NON-REGISTERED PARTNERS."

Daucher then produced documents he said showed how Cisco granted Infra-Comm the original deal registration and the extension for the customer's $650,000 IP telephony project, but then transferred Infra-Comm's bill of materials and special pricing to AT&T in violation of its OIP terms because AT&T could provide the customer protection against cover design risks that might arise from work by Cisco Advanced Services.

Daucher said Cisco not only did not honor its OIP renewal with Infra-Comm, it also canceled Infra-Comm's ICPA the following year, costing Infra-Comm not only that large deal but almost its entire business.

He said that Cisco is claiming that Infra-Comm breached an agreement to provide services to the Irvine Company under its Cisco Remote Operating Services, or CROS, by showing that almost one-sixth of Cisco's CROS customers canceled the service between 2004 and 2006.

Daucher also anticipated Cisco's claim that Infra-Comm improperly used the Cisco brand name in registering certain domain names by saying that Cisco was aware of them since 2001.

Cisco's attorney, Rollin Chippey, followed Daucher and said that Cisco did not breach any contracts with Infra-Comm and that Infra-Comm was not qualified to provide the services required by the customer.

Next: Cisco Rejects Infra-Comm's Argument

Chippey then laid out Cisco's case to show Cisco was the victim in the partnership, rather than Infra-Comm. He introduced some of the Cisco team, including Chris Schlereth, operations director of Cisco's west commercial channels and the executive responsible for informing Infra-Comm that Cisco canceled its ICPA.

Chippey then told the jury that Cisco did not breach its deal registration agreement and that it had the right to cancel Infra-Comm's deal registration with the Irvine Company. He also said that neither Cisco nor Infra-Comm entered into a mutually-exclusive relationship.

Chippey then said Cisco "bent over backward" to help Infra-Comm establish a relationship with the customer, but that Infra-Comm never had the size or resources to handle such a project, nor the ability to handle it on its own, and worked with Cisco Capital on the deal.

Chippey countered Infra-Comm's accusations that Cisco pushed the customer to work with AT&T with documents showing the customer actually wanted to do business with AT&T, that Infra-Comm never had the ability to close the deal, and that the customer dropped its CROS contract because of Infra-Comm's inability to deliver on promises the solution provider made.

Instead, Infra-Comm replaced CROS with its own services for which it received a fee of $35,000 per month instead of the $3,500 per month it received with CROS, Chippey said.

Chippey also showed a list of 12 domain names registered by Infra-Comm which included the Cisco name, such as ciscoipt.com and ciscohelp.com.

The trial is expected to last up to 15 days.