OneWeb, Softbank seek dismissal of Intelsat lawsuit

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WASHINGTON — Megaconstellation startup OneWeb and its largest investor Softbank asked the New York Supreme Court to dismiss a lawsuit from Intelsat, arguing that Intelsat failed to finalize rights it claimed it had to resell OneWeb satellite capacity. 

OneWeb and Softbank told the court Nov. 11 that a 90-day negotiation window with Intelsat in late 2016 stretched on for well over a year before concluding without a definitive deal. Intelsat received a cease-and-desist letter from OneWeb earlier this year because it was promoting exclusive distribution rights to OneWeb’s satellite capacity in four markets where it had none, according to Softbank and OneWeb. 

Intelsat sued OneWeb and Softbank Sept. 10, alleging breached contracts, fraud and conspiracy to steal confidential and competitively sensitive information. Intelsat, which operates roughly 50 geostationary satellites, invested $25 million in OneWeb in 2015, helping the British startup pursue a constellation of 650 internet-beaming smallsats in low Earth orbit. 

Intelsat seeks unspecified compensatory damages, punitive damages, injunctive relief, and coverage of certain attorney costs though the lawsuit. It said the $25 million investment was contingent on a commercial agreement that would give Intelsat customers access to OneWeb communications services. Intelsat said that it received exclusive, global distribution rights to the aviation, maritime, oil and gas, and the U.S. government markets the same year of that investment. 

OneWeb and Softbank say Intelsat’s exclusivity claims stem from an October 2016 agreement where Softbank, as part of its $1 billion investment in OneWeb, “acquired the right to purchase all capacity and services that OneWeb would develop in the future.” Intelsat had until Jan. 25, 2017 to finalize negotiations, but after two extensions, that never happened, the companies said. 

“Intelsat seeks to extract, through litigation, what it was unable to obtain in over 17 months of legitimate negotiations,” Softbank and OneWeb wrote. 

In the absence of a finalized purchase agreement and a service-level agreement, Intelsat’s exclusivity rights never became enforceable, the companies say. 

Intelsat Vice President of Investor Relations Dianne VanBeber told SpaceNews Nov. 12 that the company won’t comment on active litigation. 

OneWeb and Softbank’s response doesn’t state exactly when Softbank acted on its right to purchase all of OneWeb’s satellite capacity. Softbank Partner Alex Clavel said in March 2018 that the Japanese investor owned all OneWeb’s capacity

In their Nov. 11 memorandum of law, Softbank said it made terminating its OneWeb capacity “arrangement” part of its plan to invest more money into OneWeb in late 2018. OneWeb Founder Greg Wyler confirmed the termination of that arrangement in February

The dissolution of that arrangement also closed Intelsat’s window to obtain OneWeb services discussed in 2016, Softbank and OneWeb said. They added that Intelsat CEO Stephen Spengler and Intelsat Executive Vice President and General Counsel Michelle Bryan were well aware of that closing window because both “attended several Board meetings in which the proposal was discussed.”

“Intelsat agreed to extinguish a contract that was essential to the legal claims that it now seeks to pursue,” Softbank and OneWeb wrote. 

Intelsat, in its claim, said that while discussions about selling OneWeb capacity did extend into 2018, no one ever suggested the cooperation agreement between the two parties was ever “terminated, abandoned or was of no continuing effect or force,” according to the Intelsat’s Sept. 10 complaint.

OneWeb and Softbank counter that Intelsat’s fraud claim should be dismissed because “alleging a failure to agree on terms before the deadline will not suffice to allege a breach of the duty to negotiate in good faith.”

Intelsat says OneWeb’s business plan changed from one focused on connecting consumers and unserved or underserved people to a plan that now overlaps with key Intelsat markets. 

Softbank and OneWeb said Intelsat hasn’t specified what confidential information it claims the two companies misused, how they used that information, or how Intelsat was harmed. 

Intelsat said in its complaint it provided OneWeb with “detailed go-to-market strategies, customer names, access to antenna manufacturers currently in joint development with Intelsat, advice on technology design, and the design and construction of a satellite control center on an expedited timeframe to allow OneWeb to bring its pilot satellites into testing service in a timely manner.”

SoftBank and OneWeb said Intelsat’s claim that they used information gained in negotiations to turn around and compete with Intelsat is “fatally deficient” since Intelsat’s exclusive rights to OneWeb’s capacity never materialized.