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Court says RingCentral can keep selling Zoom for now

A federal court has ruled that RingCentral can continue selling its Zoom-powered video conferencing product RingCentral Meetings. Zoom sued RingCentral for breach of contract.

A federal judge has issued a temporary order allowing RingCentral to continue using Zoom's video conferencing service in one of its online meeting products.

U.S. District Judge Edward J. Davila issued the temporary restraining order against Zoom this week, preventing the company from stopping the use of its service in RingCentral Meetings. The ruling lasts at least until the two companies' next court appearance, scheduled for March 25.

RingCentral requested the order after Zoom filed a lawsuit claiming the UC company violated the terms of their partnership agreement. The alleged breach occurred when RingCentral launched last April a homegrown competitor to Meetings called RingCentral Video.

Zoom accused RingCentral of using Meetings to sign up video customers with the intent of switching them to Video once the product is more on par with Zoom.

"In a classic bait-and-switch, RingCentral is dangling Zoom in front of potential customers to lure them into signing multi-year contracts," Zoom said in its lawsuit filed last week.

Despite the latest development, Zoom said it was confident it would win the suit.

"We remain confident in our position and look forward to making our case and resolving this issue through the court system," the company said in a statement.

RingCentral said it was "pleased" with the decision and denied Zoom's "bait-and-switch" allegation.

"While the majority of our new customers are choosing RingCentral Video, we believe in giving customers choices," said the company, which has resold Zoom for several years.

Dhaivat Shah, a partner at the law firm Grellas Shah LLP, said RingCentral probably convinced Davila that there's a reasonable likelihood it would beat the lawsuit. Also, the company likely proved it would suffer irreparable harm if the ban went into effect immediately.

"Judge Davila is a careful jurist and does not grant TROs lightly," Shah said, referring to the temporary restraining order. Zoom's early loss in the suit "signals that it faces a difficult road ahead."

Nevertheless, Futurum Research analyst Daniel Newman said Zoom's concern that RingCentral would steal its customers is "reasonable."

"[RingCentral] likely believes it can build greater adoption and affinity over time, but Zoom is an easier sell in the current market environment," he said.

Competition between the two companies has intensified since the start of the partnership. In 2019, Zoom launched a product called Zoom Phone that competes with RingCentral's telephony service.

"[RingCentral] wants to get into video, and Zoom wants to get into phones," said Zeus Kerravala, founder of ZK Research.

Maxim Tamarov is a news writer covering unified communications. He previously wrote for The Daily News in Jacksonville, N.C., and the Sun Transcript in Winthrop, Mass. He graduated from Northeastern University with a degree in journalism. He can be found on Twitter at @MaximTamarov.

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