US operator ViaSat has been awarded US$283m in a patent infringement and breach of contract case against its one time satellite maker Space Systems Loral.
The jury found SSL infringed three patents in building high throughput systems for other…
US operator ViaSat has been awarded US$283m in a patent infringement and breach of contract case against its one time satellite maker Space Systems Loral.
The jury found SSL infringed three patents in building high throughput systems for other operators after working together on ViaSat-1 several years ago.
Viasat filed legal action in February 2012 after pointing to similarities it saw in spacecraft such as Jupiter-1 for Hughes Network Systems.
SSL’s former parent Loral, which agreed to indemnify the group for damages in the case as part of its US$875m sale to Canada’s MDA in 2012, said it would appeal the ruling.
“We continue to believe that SSL’s conduct was consistent with, and in due regard for, all applicable and valid intellectual property rights of ViaSat and that SSL did not breach any contracts,” said Loral vice chairman Michael Targoff.
“We believe that SSL has strong grounds for a reversal of the jury verdict, which we believe will ultimately result in vindication of our position. Justice in this case hinged on the complicated history of satellite technology, which was understandably difficult for the jury to completely comprehend. In particular, the damages awarded were not in any way justified by the evidence presented.”
SSL had launched a countersuit that claimed virtually all of ViaSat’s ground station products and satcoms services infringe on its own patents, but this was dropped during the trial.
The jury also found that Loral is not liable for either patent infringement or breach of contract as SSL’s owner at the time.
However, the damages will come as a blow to Credit Suisse’s reported sales process for Loral, which holds majority economic stakes in Canadian satellite operator Telesat and Spain’s XTAR, a joint venture that offers X-band services to government customers.
That process is reportedly being run alongside Morgan Stanley’s attempt to find a buyer for Telesat, which Loral shares with Canada’s Public Sector Pension Investment Board.
According to Loral, a change of control would trigger a US$200m cap on its indemnification liability in the case.
But even though SSL is not liable for the damages, Viasat is seeking to follow up the lawsuit with a permanent injunction to ban it from making or selling infringing satellites or their components. The ban it has requested would also put a stop to infringing satellites it is currently constructing, such as Jupiter-2 and satellites for Australia’s NBN Co and Brazil’s Star One.
Raymond James analyst Chris Quilty said ViaSat’s legal victory equates to around US$6 per share (untaxed), or a 9% impact to ViaSat’s stock.
“Furthermore, if ViaSat is able to assert its patents against the industry, it could result in royalty payments climbing into the US$10s of millions annually,” he wrote in an investors note.
“That said, the case will be appealed, and if history is a guide, will not be resolved for years to come.”
The case was held in the US District Court for the Southern District of California, and Viasat said there are issues that remain that could impact the amount of the award.
Quinn Emanuel Urquhart & Sullivan represented Viasat, while SSL hired Susman Godfrey.
