Loral Agrees To Pay ViaSat $100M To Settle Patent Suit

by

PARIS — Loral Space and Communications and its former satellite manufacturing division, Space Systems/Loral (SSL), have agreed to pay satellite broadband provider ViaSat Inc. $100 million, plus interest, over the next 2.5 years to settle a ViaSat lawsuit alleging patent infringement and breach of contract, Loral and SSL owner MDA Corp. of Canada announced Sept. 6.

New York-based Loral said the settlement will permit Palo Alto, California-based SSL to continue work on satellites under construction using the same ViaSat technology — now patented — that was the subject of the lawsuit, filed in February 2012.

The payment — $40 million immediately and $60 million paid out over 30 months — will be made by both New York-based Loral and SSL. Loral said the two companies have agreed to divide the cost of the early payment and to appoint an independent arbitrator to determine a division of the remaining costs.

In a Sept. 7 statement, ViaSat President and Chief Operating Officer Rick Baldridge said: “We believe this settlement is the largest ever in a commercial satellite communications intellectual property matter. It is a prudent solution that ends the distraction and cost of protracted litigation. The settlement also establishes an attractive economic value for our enabling technology that is in use among current and planned satellites, while allowing us to focus our full efforts on our next generation high-capacity satellite technologies.”

The settlement appears to represent a substantial climb-down by Carlsbad, California-based ViaSat, which had alleged more than $1 billion in total damages and had won an initial award of $283 million in April following a jury trial.

But the U.S. District Court for the Southern District of California on Aug. 8 rejected the jury’s cash award while at the same time leaving the trial verdict — that SSL had infringed on ViaSat’s intellectual property — intact. A new trial had been set to begin in November.

ViaSat said after the August ruling that the judge’s decision leaves room for the company to pursue higher cash awards through a better explanation of the damages suffered by ViaSat.

ViaSat had said Hughes’ Jupiter 1/EchoStar 17 satellite, now in orbit, violates ViaSat patents and would be reduced to one-third of its 110 gigabit-per-second throughput without the ViaSat technology.

ViaSat and Hughes both operate consumer broadband networks in North America.

ViaSat officials had sounded optimistic even after the August reversal, saying SSL and Loral personnel left a long paper trail that, when presented even to a jury of nontechnical average citizens, clearly showed that the patent violations were conscious efforts.

Loral sold SSL to MDA after the lawsuit had been filed. Loral agreed to take charge of the defense, including a share of any cash liabilities, on behalf of the two companies. ViaSat subsequently filed suit against SSL alone, a legal action that, judging from the Loral statement Sept. 6, also appears to have been abandoned.

Loral Vice Chairman Michael B. Targoff, the company’s former chief executive and a former ViaSat board member — he quit the board when ViaSat filed its lawsuit — said in a statement: “[T]he settlement with ViaSat … avoids further exposure to the uncertainties of jury determinations in complex patent matters at a cost to both Loral and SSL that, given the breadth of the settlement, is well within the range of reasonable settlements.

“We are also satisfied with the arrangements that we have put in place to allocate the payment between Loral and SSL. We believe these arrangements, providing for a knowledgeable, experienced attorney/arbitrator to make the determination, will result in a fair and equitable sharing of the settlement cost acceptable to both companies.”

MDA Chief Executive Daniel E. Friedmann said: “We are very pleased to settle these disputes with ViaSat. This settlement enables SSL and ViaSat to put our disputes behind us, which benefits everyone. We appreciate our customers’ support and apologize for any inconvenience caused to our customers during this difficult period, and we thank them for their support and patience.”