PARIS — Loral Space and Communications Chief Executive Michael B. Targoff said his company is prepared to wage legal warfare with ViaSat Inc. that will cost both companies “three to five years and tens of millions of dollars” if necessary, but that there still should be a way to avoid the battle.
Targoff’s New York-based company is named as a defendant along with its Space Systems/Loral (SS/L) satellite manufacturing subsidiary in a lawsuit filed in a California district court by one-time customer ViaSat Inc.
ViaSat alleges that Loral and SS/L stole ViaSat technology relating to satellite broadband systems. SS/L and Loral on April 9 filed a countersuit alleging that ViaSat improperly used SS/L technology even as ViaSat officials inflated the value of their own ideas beyond the bounds of patent law and common sense.
In an April 11 interview, Targoff said he still regrets that ViaSat Chief Executive Mark D. Dankberg “never picked up the phone” to call Targoff and discuss ViaSat’s issues.
Dankberg has said ViaSat for several years had made its intellectual property concerns known to SS/L but were never taken seriously.
Targoff acknowledges this last point, saying that SS/L engineers routinely had to pour cold water on ideas brought to it by ViaSat concerning the ViaSat-1 Ka-band broadband satellite, which entered service in January.
“Most, if not all, of their underlying claims relate to things that were known in the satellite industry or were laws-of-physics stuff,” Targoff said. “You can understand where this idea of theirs [that SS/L was dismissing ViaSat’s claims of novelty] came from. This is where the basic disconnect is. We were saying that a lot of what they were presenting to us was not deserving of monopoly protection. They thought they were inventing some very important stuff.”
SS/L’s countersuit says Carlsbad, Calif.-based ViaSat is guilty of improper use of SS/L patents, and has been guilty of this for years in the development of ViaSat’s satellite ground communications terminals.
Neither Loral nor SS/L has brought this to light before. Targoff said SS/L, which a decade ago was coming out of Chapter 11 bankruptcy and rebuilding its business, had other things on its mind besides monetizing patents.
“I certainly never knew of the applicability of our patents to their equipment,” Targoff said. “We have something like 160 patents and really we never spent a lot of time thinking how we could assess them against people. This industry doesn’t work like that. Look and see how many patent disputes there have been in the satellite industry. There have been some, but not many.”
Targoff pointed to the SS/L-built IPStar/Thaicom 4 broadband satellite, launched in August 2005 and owned by Thaicom of Thailand, as an example of what SS/L was producing long before it began discussing ViaSat-1 with ViaSat. IPStar has a throughput capacity of 45 gigabits per second and until recently was alone in that class of capacity.
Targoff focused on the allegation, made in the Loral counterclaim, that ViaSat should have informed the U.S. Patent Office of a Lockheed Martin system, called Astrolink, that would constitute “prior art” in U.S. patent law and would have diluted the ViaSat patent claim.
“I would be surprised if they purposely deep-sixed the Astrolink stuff,” Targoff said. “Maybe they were just reckless in not realizing it.” He said it will be interesting to see, during the discovery phase of the ViaSat-Loral legal battle, whether ViaSat engineers made reference to the Astrolink system.
“They have had an idea for quite some time that the satellite engineering world — all over the world — was not as smart as they are,” Targoff said of ViaSat, which had never ordered a satellite on its own before ViaSat-1. “There is a real sense of hubris here that is unbecoming.”
Targoff said teams of lawyers for both companies are being marshaled to prepare for what likely will be a multiyear, multimillion-dollar conflict.
But what has been set in motion can be stopped, he said. “I am CEO of this company and I can decide,” Targoff said. “I would like to think that ViaSat, when they see our counterclaim, will have second thoughts and might be willing to overcome” the serious allegations it has leveled against SS/L and Loral.
“Of course, if we find there has been clear infringement of our patents that creates some value for us — well, I have some responsibility here,” Targoff said. “But that doesn’t mean you can’t” find a solution outside a courtroom.
The bottom line, he said, is that Loral and ViaSat should be willing to lay down arms in the interest of sparing both companies a costly legal battle that will not serve either’s long-term interest.
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