PARIS — A California district court jury on April 24 ruled that satellite builder Space Systems/Loral (SSL) infringed on the patents of its former customer, ViaSat Inc., and breached its contract with ViaSat in building high-throughput broadband satellites for ViaSat’s competitor and others and awarded $283 million in damages.
New York-based Loral Space and Communications, which owned SSL at the time of the lawsuit and, after SSL’s sale to MDA Corp. of Canada, retained responsibility for defending against the lawsuit, immediately announced it would appeal the decision.
“We are extremely disappointed with the verdict,” Michael B. Targoff, Loral’s current vice chairman and its former chief executive, said in an April 24 statement. “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.”
The award was substantially less than what ViaSat had originally sought, but the full cost of the verdict to SSL and Loral is not yet known. Carlsbad, Calif.-based ViaSat said it requested that the court issue a permanent injunction forbidding Palo Alto, Calif.-based SSL from building satellites that use ViaSat patents, including satellites already under construction.
SSL has won several contracts for high-throughput broadband satellites, most using Ka-band frequencies, for customers including EchoStar of Englewood, Colo., and NBN Co. of Australia.
EchoStar’s Hughes division, a direct ViaSat competitor, has ordered the Jupiter-2/EchoStar 19 satellite from SSL. The satellite is scheduled for delivery in 2016.
EchoStar 19 is a more-powerful version of the Jupiter-1/EchoStar 17 satellite already operated by Hughes to compete head-on with ViaSat in providing satellite consumer broadband services in North America.
It was SSL’s work on EchoStar 17, coming on the heels of ViaSat’s contract with SSL to build the ViaSat-1 satellite, that aroused ViaSat’s ire and ultimately led to the lawsuit.
NBN has ordered two high-throughput satellites from SSL to deliver consumer broadband throughout Australia.
Companies buying high-throughput satellites from SSL since the lawsuit was filed have inserted into their contracts indemnification provisions that protect them from being liable to ViaSat for patent-infringement penalties or patent-related royalties that ViaSat might claim if the jury’s decision is upheld on appeal.
It is unclear whether any other satellites currently under construction at SSL might be judged as using one or more of the three patents ViaSat has secured, which were at the heart of the case in the U.S. District Court for the Southern District of California.
Loral’s main defense in the case was that SSL had acted in the way all satellite manufacturers do with their customers, with give and take on specifications and customer input on technical choices. Loral officials further said ViaSat was claiming as its own invention certain satellite transmission principles that have been known for years in the industry and were not discovered by ViaSat.
Several satellite industry officials said privately that ViaSat’s patents represented overreach, and that some principles included in the patents are little more than engineering truths that date from the 1980s if not before.
The jury apparently concluded otherwise.
“While litigation was a last resort for us in this case, the process ultimately confirmed that ViaSat invented the groundbreaking ViaSat-1 technology and the extensive damages validate the significant value of this technology in creating high-capacity satellites,” ViaSat Chief Operating Officer Rick Baldridge said in a statement. “We will continue in our commitment to protect our intellectual property and innovation.”
The case has been closely watched throughout the industry. SSL in recent years has been the most successful manufacturer of commercial telecommunications satellites. ViaSat has become one of the industry’s most prominent proselytizers on behalf of high-throughput satellite technology, which in one form or another is being added to many spacecraft under construction worldwide.
