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Cisco fights channel partner over deal registration in court

Cisco is in Superior Court of Orange County, Calif. this week facing off against a former channel partner that claims the networking giant violated a deal registration agreement and poached a $3 million dollar IP telephony customer, turning the business over to AT&T.

Infra-Comm Corp. of San Juan Capistrano, Calif. also claims that Cisco violated a channel partner agreement by booting the silver-level VAR out of the channel program after it learned Infra-Comm owners Luke and Lisa Hosinski filed suit in January 2007.

According to the lawsuit, InfraComm registered the deal with Cisco in December 2005 for a six month protection period. Infra-Comm understood this deal to provide exclusive competitive pricing that would not be offered to competing partners.

In May 2006, Cisco told Infra-Comm the registration deal was set to expire, so Infra-Comm reregistered it in June and was quickly approved. But in July, Infra-Comm found out by logging on to the Cisco website that the registration deal had been nixed. Not long after, Infra-Comm learned that AT&T had been invited to the table, receiving the same or similar pricing.

Infra-Comm continued doing business with Cisco even after it filed suit in January 2007, and, in fact, renewed its channel partner agreement online in May 2007, receiving an automatic email confirmation. But then in June, Infra-Comm received notice that Cisco had terminated the relationship after all.

For its part, Cisco said the deal registration agreement required that Infra-Comm receive fair pricing for the customer, an unnamed real estate company. However, Cisco said, the customer chose on its own to go with AT&T and the deal registration agreement did not require Cisco to maintain a client exclusively for the solution provider in that situation.

Cisco also filed a cross-complaint in August 2007 against Infra-Comm, claiming the VAR offered Cisco Remote Operating Services to the customer in question, but didn’t pay Cisco about $100,000 owed for those services. In addition, Cisco claims that Infra-Comm intentionally interfered with Cisco extending a services contract with the customer.

When news of the lawsuit first broke in June, numerous channel partners working with Cisco and other leading vendors came out of the woodwork to say that they were not shocked by Infra-Comm’s claims and that they had experienced the same treatment many times over the years. Some partners interviewed said Cisco had gotten better over the years, but most said violation of channel partner agreements remains a problem with almost every company.

The judge in the case has forbidden both sides in the case from the talking to the press until the trial closes in about two weeks.

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