One of Corel Corp.’s long-standing fulfillment partners is suing the software firm for $2.5 million over a contract dispute.

Saturn (Solutions) Inc. Tuesday

said it had filed suit against Ottawa-based Corel with the Ontario Superior Court of Justice over an alleged breach of contract. Saturn, based in Montreal, provided reproduction, assembly, warehousing, packaging and CD-ROM manufacturing for Corel, which is best known for graphics software such as CorelDraw and the word processing application WordPerfect.

Saturn president and COO Sylvain Duval said the company’s contract with Corel obligated the software maker to continue using its services until the end of July. Last spring, however, he said Saturn received a letter terminating the relationship. Saturn has worked with Corel for more than 13 years, according to Duval.

“”What we were told is that they’ve changed their business strategy,”” he said. “”We don’t have officially details as to whether they’ve changed their supplier.””

A Corel spokesperson said the company intends to rigorously defend its position.

“”We are fully satisified that we concluded our relationship with Saturn in a full and equitable manner,”” said Anne Vis, adding that there are a number of factors that influence the choice of a new supplier. “”It was not an exclusive relationship.””

Duval said Saturn tried to renegotiate its position with the software maker, but without success.

“”That’s the reason the (legal) action took so long,”” he said. “”You can just try to talk for so long. It comes to a point where you’ve got to do something to reinforce your position. We had to do something.””

Corel has made a number of changes to its operations over the last year in an effort to improve its bottom line. Last June, for example, Corel revamped its sales organization into a reseller and distribution group, partner sales and enterprise sales. It also created a telesales group for smaller accounts and a professional services organization to deliver custom solutions.

A few months later, Corel announced a return to a 100 per cent channel sales strategy and recruited a former Microsoft executive to work with resellers. In November 2002, Corel also laid off 22 per cent of its workforce in what executives called a bid to regain profitability.

Corel made up a large proportion of Saturn’s business until the company diversified its customer base, Duval said. Now it’s at a level of about 15 to 18 per cent. No other long-term customers have recently ended their contracts with Saturn, he added.

“”We were definitely surprised,”” he said. “”We’ve tried to settle it, and we have not been successful. Is this going to increase their willingness in trying to resolve this out of court or not? We don’t know.””

No trial date has been set for t

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