ViaSat Sues Space System/Loral Over Patent Infringement

ViaSat filed a patent infringement and breach of contract suit against Space Systems/Loral (SS/L) Wednesday over propriety satellite designs. ViaSat alleged Space Systems/Loral used confidential information obtained while building a satellite for ViaSat to make a similar satellite for its direct competitor Hughes Network. Hughes wasn’t named as a party in the suit. SS/L said Friday it was in discussions with ViaSat over settlement but was prepared to go to trial. The ViaSat’s ViaSat-1 satellite, made by SS/L and designed with the patents SS/L is said to have infringed, was launched in October.

The lawsuit, filed in U.S. District Court for the Southern District of California, said SS/L infringed several patents owned by ViaSat and its subsidiary WildBlue, and also violated several nondisclosure agreements (NDA). Most of the alleged violations occurred before ViaSat owned WildBlue, which it bought in 2009. ViaSat filed multiple patent applications beginning in 2006 to protect satellite designs that increase satellite capacity by combining spectrum uses, said ViaSat. The company also designed technology to make use of largely untapped spectrum that avoided interference with other satellites by lowering power at certain times, it said.

SS/L and ViaSat signed an NDA and began discussions of building a satellite in 2006. The next year SS/L filed several patents “in an attempt to claim ViaSat’s ground-breaking inventions as its own,” the suit said. Not knowing of the patent filings, ViaSat and SS/L signed a contract to build a broadband satellite in 2008, said ViaSat. Then in 2009 ViaSat learned SS/L was building a similar high capacity Ka-band Jupiter satellite for Hughes.

ViaSat seeks “an amount to be proven at trial, including but not limited to lost profits, loss of business, indirect, special, incidental, exemplary, consequential, and/or punitive damages,” the suit said.

The SS/L and Hughes deal had several suspicious characteristics, says ViaSat. First, it’s the first satellite deal between the two. Second, the Jupiter satellite included a “significant departure from the on-board processed satellite developed by Hughes over the prior decade,” said ViaSat. Finally, the satellite is “nearly identical to the ViaSat-1 satellite in terms of architecture, design and capacity,” said ViaSat.

SS/L announced the suit in an SEC filing Friday, noting the parties have decided to first talk about a possible settlement before going to trial: “If the parties are not able to resolve this matter through discussions, SS/L believes that it has meritorious defenses and counterclaims to ViaSat’s claims. SS/L believes that its conduct was consistent with, and in due regard for, any applicable and valid intellectual property rights of ViaSat. Although no assurance can be provided, SS/L does not expect that this matter will have a material adverse effect on its financial position or results of operations.” ViaSat, Hughes and SS/L didn’t comment.

Several factors can affect a patent’s status within the manufacturing process, said a patent lawyer, who wasn’t familiar with the specifics of the ViaSat suit. For instance, even if a patent application has already been filed, if a manufacturer works closely with whoever filed the patent to better develop the design, the manufacturer may often claim or actually make an “inventive contribution that could provide substantive rights if acknowledged or affect the patent’s validity if concealed,” he said. “Patents must be filed in the name of all the true inventors, and disputes as to whether folks who have contributed to product design and development, particularly where there is a joint or cooperative venture, are inventors and should be named as such in the patent, or not can go to the heart of the rights at issue in a number of different ways,” he said.

It’s often the manufacturer that must defend itself and its customers who may have received products using infringed patents, he said. In many cases the buyer is contractually indemnified from patent infringement, by the manufacturer or seller, though even if it isn’t in the contract, there’s often an implied clause saying it’s the maker’s responsibility not to infringe and to hold the customer harmless if the product does infringe, he said. Like most litigation, patent litigation is most often settled out of court, he said.