Ericsson faces $330 million suit for developing Airvana Knock Off technology

By Telecom Lead Team: Airvana
Network Solutions has filed a $330 million suit against Ericsson for allegedly
misappropriating Airvana technology to develop with a Korean partner a
knock-off product that would compete with Airvana.

Airvana has begun litigation in the
New York State Supreme Court seeking to enjoin Ericsson from selling a product
based on Airvana’s misappropriated technology. The company seeks $330 million
in actual damages.

Ericsson is Airvana’s sole customer
for the technology that provides all of Airvana’s current revenues.

The suit alleges that Ericsson began
to look for ways to avoid its obligations under its contract with Airvana and
embarked on a strategy aimed at harming and ultimately driving Airvana’s
business into insolvency.

Ericsson’s behavior is a classic
example of a giant multinational using its size and position to extract the
profits from a smaller, innovative American company. They are brazenly doing so
in violation of both our contractual agreement with them and the trust we
placed in them when we licensed our proprietary technology,” said Randy Battat,
president and chief executive officer of Airvana.

For over a decade, Airvana has
developed a product line that enables users to access data on wireless devices
over the 3G CDMA networks run by operators such as Verizon and Sprint. The
products help to make smartphones smart by enabling those devices to send and
receive high-speed data, such as email and web-browsing, over the operator’s

Starting in 2001, Airvana supplied
its data-enabling products, which consist of both hardware and software, to
Nortel, so Nortel could resell the products to network operators such as
Verizon and Sprint.

In 2005, Nortel convinced Airvana to
hand over its proprietary hardware designs so that Nortel could take over
manufacturing the hardware. Under the contract, Airvana would continue to
supply the software for the product, and Nortel would pay Airvana a royalty for
each product it sold.

The contract stipulated that Nortel
could not sell any product that used Airvana’s proprietary hardware designs
without using Airvana’s software and paying Airvana the agreed upon royalty. In
2009, Ericsson purchased Nortel’s North American wireless equipment, and among
the assets it acquired from Nortel was the contract with Airvana.

In late 2011, Ericsson informed
Airvana that it was planning to sell a competing product using software it had
developed with a Korean partner, rather than Airvana’s software. The product’s
hardware is based on Airvana’s hardware designs, and thus violates the
contractual agreement in force between Airvana and Ericsson.

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