Intelsat sues OneWeb, SoftBank citing breach of contract, fraud, conspiracy to steal information

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SAN FRANCISCO – Intelsat filed a lawsuit in the New York Supreme Court claiming OneWeb and its largest investor SoftBank breached contracts, committed fraud and conspired to steal confidential and proprietary information.

The nine-count lawsuit filed Sept. 10 stems from Intelsat’s $25 million investment in OneWeb, subsequent cooperation agreements and the unsuccessful merger of the two parties. Intelsat is seeking unspecified compensatory damages, punitive damages, attorney’s fees and a halt to OneWeb and SoftBank actions that violate their agreements with Intelsat.

Intelsat’s 2015 investment in OneWeb was contingent upon a commercial agreement giving Intelsat customers access to OneWeb communications services, according to the complaint. The companies signed an agreement in late 2015 that made Intelsat the “sole and exclusive worldwide and regional distributor” of OneWeb communications services to customers in four markets: aviation, maritime, oil and gas, and the U.S. government, the complaint added.

At the time, OneWeb planned to focus its business on offering broadband access to consumers around the world and providing communications services in underserved geographic areas.

In 2016, SoftBank invested nearly $1 billion in OneWeb, acquiring a 40 percent stake in the company, according to the complaint. Then, “in willful breach” of OneWeb’s agreement with Intelsat, OneWeb agreed to let SoftBank purchase 100 percent of its future satellite capacity and appointed SoftBank as its exclusive global distributor of communications services, the complaint said. The agreements between OneWeb and SoftBank were “never discussed or cleared with Intelsat,” the complaint added.

When Intelsat objected in 2016, OneWeb, SoftBank and Intelsat agreed to amend the original cooperation agreement between OneWeb and Intelsat. Under the new agreement, Intelsat would maintain “exclusive distribution rights” but would procure OneWeb communications services through SoftBank, the complaint said.

Based on this agreement, Intelsat provided “financial, technical and other support to OneWeb,” the complaint said. “Intelsat also disclosed, at OneWeb and SoftBank’s behest, proprietary, confidential technical and customer information” related to the four markets Intelsat planned to target, the complaint added.

In 2017, while the parties were discussing ways to offer customers access to both OneWeb’s and Intelsat’s communications services, they began to discuss a merger, according to the complaint. Under the proposed merger, SoftBank would “invest up to $1.5 billion in Intelsat,” which would combine with OneWeb to form a single satellite provider, the complaint said. That transaction, which was contingent upon changes in Intelsat’s debt, fell apart in June 2017 when Intelsat’s debt holders did not agree to the deal.

After the merger failed, OneWeb and SoftBank discussed the possibility of establishing a relationship that extended beyond the four markets listed in Intelsat’s original agreement with OneWeb, according to the complaint. For example, they contemplated joint marketing of combined communications services for the connected vehicle market, the complaint said.

Those discussions continued beyond March 31, 2018, a date listed in the amended agreement between OneWeb, SoftBank and Intelsat. That document said SoftBank agreed to sell OneWeb Services to Intelsat “pursuant to a master service agreement to be negotiated and agreed between Intelsat and SoftBank on or prior to March 31, 2018,” the complaint said.

Although that date passed, “at no point during the parties’ negotiations” did anyone say the cooperation agreement between OneWeb, Intelsat and SoftBank “had been terminated, abandoned or was of no continuing effect or force,”  the complaint said.

However, Intelsat’s dialogue with SoftBank stopped suddenly in April 2018, the complaint said. At the time, SoftBank “was actively seeking to sell its investment in OneWeb,” the complaint added.

In February 2019, OneWeb informed Intelsat it “no longer believed the parties’ discussions about a broader commercial arrangement would be fruitful,” according to the complaint. Intelsat then received a “cease and desist letter” in July 2019 from OneWeb, demanding that Intelsat “refrain from representing to distributors that Intelsat possessed any exclusive distribution rights” to OneWeb capacity in specific markets, the complaint said.

Prior to sending that letter, OneWeb was already negotiating for the purchase and resale of its capacity with distributors and customers, the complaint said.

On its website, OneWeb lists four markets it intends to serve: aviation, maritime, enterprise and government customers. By focusing on aviation, maritime and government customers, OneWeb “has deprived Intelsat of the exclusive distribution rights it is entitled to,” the complaint said.

Furthermore, Intelsat claims that OneWeb “has made improper competitive use of Intelsat’s confidential information” and that OneWeb and SoftBank “conspired to utilize Intelsat’s confidential and proprietary information” for purposes other than carrying out their agreement with Intelsat, the complaint said.