To Whom it May Concern,
Luster confirms and Authorize Draco as Authorized Partner to collaborate on Yes MoCA project.
Luster declare that Draco is the sole Authorize partner for Yes MoCA project.
Luster will support Draco during the project and after sale support."
(Appendix 2 to Micha's affidavit on behalf of the plaintiff).
- It should be clarified that most of the technical communication between the parties in relation to the project was made prior to the signing of the authorization letter and the conclusion that derives from the fact that there is no connection between the actions taken by Draco regarding the provision of instructions for the adaptation of Luster Lease products, and the need for Luster to sign the authorization letter. The main part of the signing is in order to operate with Yes as the exclusive distributor of Luster.
- After that, there was no communication between the parties until December 2, 2019, when Ben informed Draco that Luster intended to polish the Mocha product with Wi-Fi with a new version of Mocha 2.5 with Wi-Fi and with all the features required by Cellcom and Lis, regardless of whether the customers would need the product until it was developed. When the estimated time for development is until 4/20.
- Micha replied that he was happy to hear about the plans and that the parties would be in touch when it was ready and we would see the status of the potential projects at that time.
- After the December email, the relationship between the companies was cut off for eight months until 8/20.
- Meanwhile, in July 2020, Yes published an RFP - an invitation to bid for a Mocha 2.5 product without a VPN (Appendix 9 to Ben's affidavit) and contacted various resellers. Among other things, she turned to Draco and Axel.
- On July 14, 2020, Excel contacted Luster to provide a 2.5 lis mocha product. In the email, Excel informed Luster that Yes had released a new RFP for the Mocha 2.5 product. Attached to the notice was the Yes Demand Document (Appendices 7-8 to Ben's affidavit).
- Over the course of a month, extensive correspondence was conducted regarding the characterization of the product and its adaptation to the requirements of the RFP document. In this framework, samples of the Mocha 2.5 lis product were also sent.
- Draco, on the other hand, did not turn to Luster but to other manufacturers, Etong and Zintec.
- After the work that was done between Luster and Axel, when Draco realized that Luster was working with Axel (Gilad interrogation, p. 87, Q. 14), on August 19, 2020, Assaf Roth contacted Luster from Draco and announced that Draco had received an order for 100,000 units of Mocha 2.5 and asked Luster if she had the product.
- Following this request, Ben contacted Axel, claiming that Draco had informed him that it had already received an order for 100,000 units and that it was not clear to him the reason for investing in the product when Draco had already been selected by Yes to supply it. Axel, for her part, clarified that this was an unacceptable attempt by Draco to deceive Luster in order to prevent Axel from competing with her. In order to reassure Luster, a letter was sent to the Bis Procurement Manager, Mr. Shai Levy, who confirmed that the samples had been received from Excel and that the product should be adapted to the process so that it would be possible to proceed with the procurement.
- Draco, for her part, turned to Luster and informed her that she had invested time in Luster on the condition that all Luster Lease orders would be made through Draco, so she insisted that Luster continue to work with her.
- Luster, for her part, didn't care if she worked with Axel or Draco, so she announced that she was willing to work with Draco on the condition that Draco commit to her in the project for mutual exclusivity, but Draco refused.
- During the months of September to December, Excel continued to invest time with Luster Weiss in order to adapt the required products, until in January 2021, Yes sent a purchase order for a Mocha 2.5 product made by Luster.
- It should be noted that at no point did Luster or Draco inform Excel that it had an exclusivity agreement with Luster until the warning letter sent from Draco to Excel on December 17, 2020, days before the deal was received.
- In practice, Draco also received a Mass purchase order for more than 200,000 products that are the subject of the lawsuit, as a marketer of the manufacturer Etong (pp. 56, 21-22).
The Witnesses
- Affidavits were submitted on Draco's behalf and Gilad and Micah testified.
- On behalf of Luster, he submitted an affidavit and Ben testified, and Shai Levy, a purchasing manager at Yes, was summoned to testify.
- On behalf of Excel, an affidavit was submitted and testified by Ronen Schorr, CEO of Excel.
Disputes between the parties
- Draco treats the authorization letter as an exclusivity agreement that binds Luster to only Draco to market it to Yes. When the agreement was breached, she claimed that the claim for the provision of accounts concerning the presentation of all the agreements signed between Yes, Excel and Luster should be accepted.
- The lawsuit raises a number of disputes between the parties:
- Does the letter of authorization signed by Luster constitute an exclusivity agreement and what does it mean?
- What project does the authorization letter refer to?
- Is there a special relationship between the parties that justifies the granting of accounts?
- Is there a reason to obligate Excel to provide accounts for causing a breach of contract?
Discussion and Decision