March 31, 2014, 4:46 PM — 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 violated antitrust law when it attempted to stop Continuant, an IT support company in Washington state, from providing post-warranty support on Avaya phone systems and predictive dialers, the jury said in a verdict issued on Friday.
But jurors rejected a majority of Continuant's claims and awarded the company US$20 million in damages, far below the range it had recommended, of roughly $130 million to $140 million. Because the case involves a violation of the Sherman Antitrust Act, any award is automatically trebled, in this case to $60 million, said attorney Anthony La Rocco of K&L Gates, which represented Continuant.
Now that the jury has reached a verdict, Continuant will also ask the court for injunctive relief to prevent Avaya from monopolizing the market, La Rocco said.
"Our main objective in filing our counterclaim nearly eight years ago was to have the right to compete on a level playing field. Now we can," Continuant Co-founder and Chief Sales Officer Bruce Shelby said in a press release.
Avaya said it anticipates post-trial motions and an appeal. It said the verdict doesn't affect Avaya's existing contracts with its customers or partners.
The verdict in the U.S. District Court in Camden, New Jersey, came after a court battle more than seven years long in which the tables were turned on Avaya, one of the world's largest suppliers of enterprise voice equipment. In 2006, it sued Telecom Labs (TLI), which sold maintenance services for Avaya PBXes (private branch exchanges), saying that the company used illegal means to access its clients' equipment to work on it. Telecom Labs, later renamed Continuant, countersued with claims that Avaya tried to set up an illegal monopoly on maintenance of its gear.
All of Avaya's claims eventually were dropped or dismissed, so all that remained were the antitrust accusations against Avaya.
The court fight was just the latest example of the often fractious relationships between IT vendors and independent companies that maintain and service their products. IBM has faced several lawsuits and government actions since the 1950s stemming from concerns about the company monopolizing hardware and software. Minicomputer makers Data General and Prime Computer dealt with similar issues, and Kodak has faced concerns around maintenance for its copiers. Recent years have seen giants including Cisco Systems and Oracle take strong legal action against companies that they said used illegal means to provide tech support to users.
Similar disputes have embroiled the auto service industry, where independent shops have fought to be able to compete against car dealers.