Cisco battles reseller’s antitrust lawsuit over network equipment

Jan 23 (Reuters) - Internet equipment giant Cisco Systems (CSCO.O), is squaring off in a Texas trial this week against an independent reseller that claims Cisco unlawfully impeded competition for key network components by questioning the credibility of its sales.

Dexon Computer Inc sued Cisco in Texarkana, Texas, federal court in 2022, alleging some of the San Jose-based company’s business practices violate U.S. antitrust law.

Cisco has denied any wrongdoing and said it acted lawfully to protect its intellectual property in discouraging customers from purchasing equipment from independent distributors. Dexon alleged Cisco was "threatening and coercing customers into buying overpriced networking equipment."

The trial began on Monday amid a broader feud between the two companies.

Cisco in 2020 sued Dexon in California for allegedly violating intellectual property rights. A judge last year in San Francisco issued an order barring Dexon from selling counterfeit Cisco equipment. The court in that case rejected Dexon’s counterclaims.

Cisco in a statement on Tuesday said it “will vigorously defend itself against Dexon’s meritless claims in court, which have already been dismissed by a federal court in California.”

Dexon and its attorneys did not immediately respond to requests for comment. The company has appealed the injunction in the California case and argued that it has "extensive" quality controls to detect and prevent counterfeits.

In the Texas case, Dexon claims Cisco and one of its authorized resellers, CDW Corp, schemed to box it out of some product markets. Dexon’s lawsuit also named CDW as a defendant, but the two companies reached a confidential pre-trial settlement.

Dexon has alleged Cisco spread “fear, uncertainty and doubt” in the industry, including with threats that purchasing unlicensed Cisco equipment from Dexon could result in “significant liability.”

Minnesota-based Dexon is seeking potentially tens of millions of dollars for alleged lost revenue. Dexon has sold computer networking products for more than 30 years.

Cisco maintains that Dexon is "an unauthorized reseller that decided not to follow Cisco’s anti-counterfeiting policies and sold counterfeit to customers.”

The case is Dexon Computer Inc v. Cisco Systems Inc, U.S. District Court for the Eastern District of Texas, No. 5:22-cv-00053-RWS-JBB.