In a move that has been welcomed by authorised partners, Cisco has settled a trademark infringement dispute with UK broker K2 IT Ltd, CRN can exclusively reveal.
The Stockport-based outfit has agreed to pay Cisco a "substantial sum" after being caught trading in kit that had originated from outside the European Economic Area (EEA).
K2 acknowledged that its unauthorised trading activities led to a number of counterfeit items being inadvertently transacted by the company.
The Stockport-based outfit has also incorporated a new business that will transact future sales under an indirect channel partner agreement with Cisco.
In May, police smashed a $10m London Cisco counterfeit ring and Neil Sheridan, Cisco's director of brand protection, emerging markets, said the settlement with K2 should also be viewed as a "big event" in Cisco's brand protection strategy.
"The London raids were a direct counterfeit issue," he said. "The issue we are addressing here is primarily parallel import [from outside the EEA], and as a consequence, there was also some counterfeit product we identified at K2."
He added: "I think you will see some further actions from the information we now have [on K2's suppliers], which we are now considering how we are going to use."
The availability of cheap - sometimes counterfeit - Cisco kit imported from outside the EEA is a source of frustration for authorised Cisco partners, many of whom welcomed news of the latest settlement.
Paul Sweeney, chief executive of Cisco Gold partner ANS, said authorised dealers often find themselves trounced on price despite all the pricing benefits they enjoy from Cisco.
"At an enterprise and public sector level, customers are aware of the risks around grey imports and are very wary," he said. "But where we do see it is as you go further down into the SMB, where they just want to buy as cheap as possible. If you tell them it might be counterfeit or there might be a problem with the warranty they are prepared to take the risk. You can spot it a mile off because we'll quote the customer with all our programmes and incentives and they'll be getting it below our cost."
Justin Harling, managing director of Cisco Gold partner CAE, also welcomed the development.
"Counterfeit - even if inadvertent - is still counterfeit and it does cause issues down the line," he said.
"We've noticed from Cisco that they're actively involved in closing these markets down and will also engage with us as partners to educate people as to why they should buy through the official route. If there's anyone nowadays who thinks there is an alternative, they are sadly mistaken and deserve the consequences."
Chris Roche, managing director of Cisco partner Celerity, said: "The partners who invest in the skills, training and accreditations should be protected, so we welcome this."
A level playing field
Sheridan said tools Cisco has recently introduced mean it has improved its ability to detect trademark infringement. Cisco has reached settlements with multiple other firms recently but details were not made public, he said.
Cisco said it initially identified a relatively small number of products that K2 sold in the EEA in violation of Cisco's trade mark rights. It used these infringements as the basis for securing wider disclosure of several years' worth of K2's infringing trade in Cisco products.
Sheridan (pictured) stressed that Cisco has no issue with legitimate grey market activity within the EEA.
"Where people are trading in parallel imports and counterfeit, we do look at that," he explained. "It's on K2's head to know whether or not the kit [they sell] is EEA-compliant. The law is pretty clear that the onus is on the person who is selling it and I honestly don't think they took sufficient precautions to prevent themselves trading in infringing products."
He added: "With all the complaints that partners have around the broker market and what impact it has on their business, this action is directly to support our partners to have that level playing field."
K2 and its directors have given undertakings that they will not infringe Cisco's trade marks in the future.
Sheridan said he was grateful for K2's "constructive approach" and confirmed the firm is now planning to work its way up through the ranks of Cisco's authorised programme.
When approached by CRN, K2 declined to comment further.
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