Zoom Video Communications late last week filed a trademark infringement case against rival RingCentral that highlights the shift in the relationship between the two companies from important partners to bitter rivals.
In the lawsuit, filed in the Northern District of California, Zoom (ticker: ZM) notes that RingCentral (RNG) entered a partnership with Zoom to resell its videoconferencing software in 2013. But Ring last April announced plans to begin shifting customers using its broader communications suite to its own video platform, and then debuted a free-standing version of its video software in December, directly competing with Zoom’s core business.
In a heavily redacted version of the complaint, Zoom asserts that RingCentral has continued to market and resell Zoom’s products to new customers “despite repeated requests from Zoom that it stop,” and that it continues to make use of Zoom’s trademarks to aid that effort.
In a statement, RingCentral said that it disputes Zoom’s allegations.
The complaint asserts that RingCentral has “invoked confidentiality and noncompetition provisions in the agreement” to bar Zoom from competing for RingCentral’s customers, “all the while maintaining that RingCentral show how has free rein to say whatever it wants about the partnership and to make every effort to steak away Zoom’s customers.” Zoom alleges that Ring “has embarked on a campaign of misinformation designed to mislead customers, investors and the public at large.”
Zoom asserts that Ring falsely claims that it is shifting customers to its own video services (RingCentral Video) and away from a rebranded version of Zoom (RingCental Meetings) for quality and feature reasons. “If RingCentral truly believed its video product was a quality replacement for Zoom’s product, it would transition all of its customers with no further delay,” Zoom says in the complaint. “Its failure to do so reveals that RingCentral believes the opposite to be true. Zoom’s products are the best in the market and provide the features that RingCentral’s customers desire.”
Zoom also asserts that despite RingCentral telling customers and investors that it is moving toward independence from Zoom, “RingCentral in fact seeks to cling to Zoom’s products, brand and extraordinary goodwill, for as long as possible.”
Zoom says the lawsuit is intended to “stop this improper conduct,” to stop the infringement of its trademarks, and to establish that previous confidentiality and noncompete provisions “are void to the extent that they restrain fair competition by Zoom.”
RingCentral said that it disagrees with Zoom’s reading of their longstanding distribution agreement. It asserts that Zoom’s actions seem to be “motivated by fear of RingCentral’s success” both in customer momentum for Ring’s integrated messaging, video, and phone platform and the quality of its videoconferencing service.
“As a consequence, Zoom is attempting to restrict customer choice and to hinder competition,” Ring said. “The plain truth is that Zoom cannot offer an integrated MVP (messaging, video, and phone) experience, and restraining RingCentral from using RingCentral Meetings during the contractually agreed time period would limit customer choice.... The lawsuit attempts to obstruct RingCentral’s efforts to complete the transition of its customer pipeline to RingCentral Video—a transition that is already well underway.”
Adds Ring: “We believe in fair competition, putting the customer first, investing in innovation and letting the market decide. Zoom’s actions show that it does not. We will remain focused on what our customers need, and we want our customers to know that nothing has changed in our agreements with them.”
Zoom shares were down 1.6%, at $344.28, in recent trading, while Ring was off 3.8%, to $331.10. The S&P 500 was up 0.1%.
Author：Eric J. Savitz