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Avaya tried to monopolize maintenance, jury says in US$60 million verdict

Stephen Lawson | April 1, 2014
A federal jury in New Jersey has handed a setback to Avaya, ruling that it illegally tried to quash competition for service on its enterprise communications equipment.

Avaya started letting authorized resellers provide maintenance services around 2000. Today, the company has about 11,000 authorized business partners around the world and just over 400 of them are certified to provide maintenance. TLI became one of those maintenance partners in 2003, but Avaya ended its contract after a few months because of a dispute over noncompete terms, according to court documents.

TLI kept providing maintenance for Avaya users, but to do so it had to work around restrictions on access to the software commands it needed to service its customers' equipment. The restrictions included rules on using Avaya's ODMCs (on-demand maintenance commands). TLI said those constraints and other actions were illegal attempts by Avaya to create a monopoly on maintenance of its products.

Enterprises may turn to independent IT support companies as a cheaper alternative to the vendor or its authorized channel partners, sometimes to extend the life of a piece of equipment after its warranty or prepaid support contract expires. Missing out on potential ongoing revenue is just one reason manufacturers may object to this. Another is that if customers have problems after getting service from an unauthorized support company, they may blame the vendor and hurt its reputation, said Frost & Sullivan analyst Rob Arnold.

For enterprises, there are risks to stepping outside the vendor and its partners for support, Arnold said. The third-party service may be less expensive for a reason. "If there's a deal, you have to evaluate what's in that price," he said.

Ever since IBM opened up the market for support of its mainframes, the hardware maintenance market has been mostly open to competition, said Brooks Hilliard, a consultant and expert witness who has testified in IT support cases. But as more of the value in enterprise IT products ends up in software, things have gotten more legally complicated, he said.

IT vendors try various legal means to control who can work on their gear, including using copyrights on software or manuals, said Edward Naughton, an intellectual property (IP) attorney at Brown Rudnick LLP. But courts have tried to strike a balance between their claims and the benefits of customer choice, he said.

IP laws may give owners a monopoly, but it's always a limited one, he said.

"Where do you draw the boundary between the monopoly that we give to encourage the development of IP, and the desire to have free competition?" Naughton said.

The case isn't likely to break new ground in the law surrounding third-party maintenance, Naughton and Hilliard said.

"It's come up a lot of times before, and all of these industries have managed to survive," Naughton said.


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