Chink in the armor?

Throughout The Gripe Line's 10-year history, one company that has been conspicuously absent in readers' complaints is Cisco. So I was surprised recently when, within a few days of each other, two readers raised unrelated but interesting issues regarding the router giant’s policies.

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Reader A reported that his company wanted to renew the support contract on a Cisco 7206 router, so it sent a check for about $5,000 to the authorized Cisco reseller that had originally sold the company the router. “The reseller cashed the check on Jan. 14 and then went out of business on Jan. 15 without ever buying the service contract from Cisco,” lamented Reader A. “Now Cisco is telling us that we are up the creek without a paddle, and they will not honor the service contract purchased through [its] reseller.”

Although it’s possible Cisco is not legally obligated to provide the service contract in such circumstances, the reader felt there were many reasons why the company should. “As you may know, Cisco does not sell service contracts for such high-end hardware directly, but only through resellers,” he pointed out. The defunct reseller had actually been one of a select group qualified to handle that product line. And because the transaction was a renewal of an existing contract, wasn’t the reseller essentially acting as Cisco’s agent? “This is really disappointing because, in the years we have had the Cisco 7206 in mission-critical operation, we have never actually called for service even once,” he continued. “Cisco's offer at this point is to put us in touch with another reseller and let us pay another $5,000 to get coverage, which is not exactly what we regard as fair.”

At Reader A’s request, I asked Cisco to look into his case to make sure it really did reflect the company’s policy. While company spokespeople were initially optimistic that something could be done for him, the final response was much the same as Reader A had been told. “In cases like this, unless Cisco has accepted the order from the reseller, or a separate agreement has been reached between the customer and Cisco, Cisco cannot take responsibility for the reseller's failure to perform,” a Cisco spokesperson said. “These occurrences are rare, due to Cisco's rigorous standards around its reseller authorization process. But whenever Cisco does discover reseller inequities, we will take steps to improve the quality and consistency of the Cisco reseller community.”

Reader B was showing his Cisco rep around his facility one day and just happened to point out a Cisco router he had purchased on eBay for a great price. Far from congratulating the reader on the great deal, the rep indicated Cisco might have problem with that. “Although he was polite, he indicated that ‘Cisco hates eBay,’ " Reader B said. “Apparently, when one buys Cisco products, he is not authorized to resell the OS for the apparatus, though he can do whatever he likes with the hardware on which it runs! So technically, even though I bought an unopened router from a defunct dot-com, I am in violation of [Cisco's] licensing agreement.”

Although the rep assured him he was not at risk of legal action from Cisco, Reader B decided he’d better cut a deal to make the router legitimate in Cisco’s eyes.

Unlike Reader A’s case, in this situation Cisco had no trouble determining what its policy is when I asked: It is spelled out in detail on Cisco’s Web site (http://www.cisco.com/warp/public/csc/refurb_equipment/swlicense.html). “Like many high-tech companies that produce software, Cisco adopts a policy of nontransferability of its software in order to protect its intellectual property rights,” Cisco’s policy document reads. “What this means in practice is that owners of Cisco products are only allowed to transfer, re-sell, or re-lease used Cisco hardware and not the embedded software that runs on the hardware. … Companies interested in transferring title and ownership of Cisco equipment that contains embedded software may now purchase a new software license to do so.”

Although the policy is clear enough, it raises some more questions. For one thing, Reader B pointed out that this was an unopened box that he purchased on eBay. Would that not mean that the transfer restriction in the software license agreement did not apply to the dead dot-com that originally purchased it, because they never opened the box to see it?

A bigger question for me, though, is the policy itself. Exactly how does it help Cisco “protect its intellectual property rights" when it insists a secondary market customer must re-license the operating system? After all, Cisco doesn't face a real threat of software piracy because the user needs the Cisco hardware to get any value from the software. And whereas it's certainly true that many software companies have transfer restrictions, most of the operating system licenses I'm familiar with do allow transfers as long as the software remains with the original hardware. So what is the justification for prohibiting transfers -- other than generating some extra revenue for Cisco, that is?

Once again, the question arises as to why the producer of a product that happens to have software in it should be able to put arbitrary restrictions on what a customer can do with it. But that’s a debate we will have to continue at another time.

For now, let me just note that, although I said these two gripes are unrelated, there is an ironic comparison to be made between the fates of Reader A and Reader B. The latter bought through a channel that Cisco hates, and he indeed got burned. But the former bought through the channel Cisco endorses and he got burned even worse. This is just one man’s opinion, but if Cisco persists in these kinds of policies, I believe it’s a name we’ll be hearing a lot more in connection with complaints.