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Continuant Scores Win in Avaya Antitrust Lawsuit

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If the legal fight between Avaya and solution provider Continuant were an episode of “Law & Order,” the line “we’re going to trial” would be uttered about now.

Avaya lost two motions for summary judgment designed to end the antitrust lawsuit brought by one of its partners, Continuant. A New Jersey federal court judge essentially ruled that the case alleging Avaya’s practices of prohibiting customers from using the carriers or services support providers of their choice could go to a jury trial.

“A manufacturer should not be able to restrict a customer’s choice as to who maintains their equipment just by virtue of the fact that the product includes software.  Whether you are a business or an individual, you should have the right to decide who services the product you have purchased— whether it’s your phone system, your computer or your car. That’s what’s at stake in this lawsuit,” said Joe Marion, executive director of the North American Association of Telecommunications Dealers, in statement.

The lawsuit dates back to 2006, when Continuant first challenged Avaya policy of restricting service and support contract assignments. Avaya policy at the time, customers are restricted from sourcing product and support from companies other than Avaya directly or it’s authorized resellers. Continuant is not an Avaya partner, but supports Avaya products and services.

On its Web site, Continuant explains its relationship to Avaya: “Continuant operates independently from Avaya. Independence from the original equipment manufacturer (OEM) enables Continuant to provide unbiased consultation and certified support irrespective of OEM policies – policies that frequently serve the best interest of the OEM rather than the customer.”

Continuant also supports the products of other voice and data vendors, including Siemens Communications, Cisco and Nortel.

Judge Garrett E. Brown’s ruling is the latest in a series of losses suffered by Avaya. In November, Avaya lost two counterclaims that Continuant violated the Digital Millennium Copyright Act (DMCA) by accessing and modifying the source code of its PBX servers.

In a Channel Partners magazine report, Avaya said it “continues to vigorously pursue these claims, as well as defend against Defendants’ claims, as this litigation progresses.”

Lawsuits challenging the restrictions of vendor channel programs and authorized relationships are rare, but not uncommon. One of the better known lawsuits was initiated by Peter Alfred-Adekeye and his company, Multiven, which had a similar model to Continuant in support of Cisco networking equipment. The Multiven case resulted in Alfred-Adekeye being held in Canada for more than a year on allegations of hacking Cisco’s network.

The Continuant case is interesting in that it seeks to essentially end vendors’ practice of restricting product sales and service support to authorized partners. Such restrictions are enacted to protect the investments made by authorized partners in becoming certified and developing customer support capacities. They’re also a mechanism for protecting a vendor’s brand, giving it control over the customer experience. Lifting the cap could open authorized partners to new competition and, potentially, redefine customer experiences.

All vendors and solution providers should monitor the Avaya-Continuant lawsuit. The outcome could have widespread implications for the entire channel.

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