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Kaspersky takes Hemisphere Technologies to court in royalties wrangle

Kaspersky takes Hemisphere Technologies to court in royalties wrangle

Millions at stake in legal proceedings spanning two countries

On 14 October, the case was heard at the NSW Supreme Court, with Justice Bergin granting Hemisphere Technologies an extension for arbitration in Stockholm, with the Swedish capital playing host to the arbitration proceedings due to a special clause in the distribution agreement.

“The arbitration clause in the distribution agreement referred disputes, except for royalty claims, to arbitration in Stockholm," said King & Wood Mallesons partner, Max Bonnel, in a blog post co-authored by Brecht Valcke and Bryce Williams - none of whom are involved with the case.

"This 'carve out' meant the arbitration process could only commence once a court had determined Kaspersky’s entitlement to royalties, the non-payment of which entitled Kaspersky to terminate the distribution agreement.

"Kaspersky had brought a claim in the Supreme Court of New South Wales for payment of the royalties. Injunctions to preserve the status quo had been granted by the Court for 30 days to allow Hemisphere to bring its claim disputing Kaspersky’s termination in arbitration.

"Hemisphere had made an application to an emergency arbitrator for similar interim relief, but it was refused. Hemisphere then sought to extend the court’s injunction to allow for Hemisphere to put a ‘reasoned request’ to the emergency arbitrator for the decision to be amended or revoked under Article 9(2) of the Stockholm Rules."

Channel impact

The legal proceedings arise several months after former Kaspersky Lab A/NZ managing director, Andrew Mamonitis, left the cyber security vendor to step into a director role Hemisphere Technologies.

“We have aggressive expansion plans for the next year and are hoping to grow our staff count by 30 per cent,” said Hemisphere Technologies director, Peter Phokos, at the time.

“Andrew is a critical part of those plans, bringing him on board as director allows me to focus on the operations side of the business while confident the sales side is being handled by one of the best in the business."

In mid-October, Hemisphere Technologies ceased listing Kaspersky as a partner in the local market.

As a result, ARN understands that, at present, Exclusive Networks is the only distributor in Australia to claim Kaspersky Lab as a vendor partner.

However, Hemisphere Technologies revealed on 20 October that it had inked an exclusive distribution deal with Finnish cyber security vendor, F-Secure, bolstering its cyber security portfolio in the wake of Kaspersky's departure.

"We’re excited to be doing this with a channel-friendly company that shares our values around trust, consistency, and mutual growth for our partners," said Mamonitis at the time.

Hemisphere Technologies declined to comment to ARN, given that the legal proceedings are still underway.

A pattern emerging

The case comes as data centre technology distributor, DPSA, battles Schneider Electric in the NSW Supreme Court, with the energy management and automation solution vendor alleging that DPSA owes it $5.47 million, following the breakdown of the companies’ distribution arrangement.

According to court documents filed in May, Schneider Electric alleges that DPSA has “wrongfully failed and refused” to pay the principle outstanding amount of $5.36 million that it billed the local distributor in relation to work it did for Canberra Data Centres (CDC).

In 2004, DPSA signed a deal with Schneider Electric to be the non-exclusive two-tier distributor of the vendor’s products, solutions, and services within Australia.

In 2009, DPSA won the rights to supply hardware from Schneider to CDC for the fit-out of the company’s Fyshwick data centre.

However, DPSA claims that in June 2015, Schneider Electric allegedly entered into an agreement with CDC directly, effectively cutting DPSA out of the deal.

DPSA claims that this resulted in the loss of profit on the profit of future sales of 40 HACS pods for the second stage of CDC’s Fyshwick datacentre, equating to $3.52 million, and an additional 30 HACS pods for CDC’s Hume datacentre, which equates to around $2.4 million.

“DPSA was Schneider Electric distributor for CDC for about 8 years. From its establishment in 2007, and we had an excellent long-term relationship,” DPSA CEO and CertaOne director, Jacques Tesson, told ARN.

“I was invited to dinner one evening, and without any warning was told that Schneider Electric was now supplying CDC directly.

“We have made a legal claim for the resulting losses. After that, Schneider Electric terminated all distribution agreements,” he said.

The cases continue.


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