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Court Orders Boston Communications Group and Cingular Wireless to Stop Selling Infringing Prepaid Wireless Without a License

Posted on: Tuesday, 18 October 2005, 09:00 CDT

The United States Federal District Court for the District of Massachusetts has granted an injunction against Boston Communication Group, Inc. (BCGI) and Cingular Wireless, forbidding them from continuing to sell prepaid wireless services of the type that were found to be covered by Freedom Wireless' patents. The order follows the jury's unanimous verdict on May 20, 2005 that 32 claims of two of Freedom's six U.S. patents on prepaid wireless were valid and infringed by defendants BCGI, Cingular Wireless (a joint venture between Southwestern Bell (SBC) and Bell South (BLS)), CMT Partners, AT&T Wireless and Western Wireless (recently merged into Alltel Communications, Inc. (AT)), as well as the Court's September 1, 2005 ruling that the two Freedom patents at issue in the case were fully enforceable.

"The injunction prohibits any of the defendants from making, using, or selling prepaid wireless services based on the systems found to infringe, either by themselves or jointly with any other companies," said Bill Price, lead trial lawyer for the plaintiff and chair of Quinn Emanuel Urquhart Oliver & Hedges LLP's trial practice. It thus prohibits BCGI and its current carrier customers, including Alltel and Cincinnati Bell, Inc. (CBB), which were named in a recent patent infringement lawsuit by Freedom Wireless, from selling prepaid wireless services using the infringing BCGI systems.

While the defendants are prohibited from adding new customers to the infringing systems from today forward, they can continue to serve current customers for 90 days, but they must pay Freedom a 2.5-cent per minute royalty for any use during that grace period.

Although the jury awarded Freedom Wireless $128 million as compensation for defendants' sale of over 5 billion minutes resulting in $1.5 billion in revenue, the amount of damages continues to rise. On October 12, the Court awarded Freedom Wireless an additional $19.7 million in prejudgment interest to reflect the loss of interest on the royalties that should have been paid over the past seven years of infringement. The Court also granted Freedom Wireless' motion for an accounting in order to assess additional damages for the period between December 2004 and the judgment. During that time period, defendants BCGI and Cingular Wireless have jointly sold an estimated 585 million minutes, which could result in an additional $14.6 million in damages.

Also last week, the Court denied Freedom's motion for attorneys fees and enhanced damages, but clarified that "the evidence fully supports the jury's finding that the defendant Boston Communications Group, Inc., willfully infringed plaintiff's patents" that the "the jury verdict constitutes a fair, reasonable and just compensation for such willful infringement."

On September 28, 2005, Cingular Wireless posted bonds totaling $140.6 million as security for its intended appeal. Cingular Wireless and BCGI will be required to supplement that bond now that the damages have risen to nearly $150 million excluding additional amounts that may be awarded to account for post-judgment interest and royalties for the period covered by the accounting.

Although Freedom has entered into license agreements with Convergys Corporation (CVG) and Telcordia Technologies, Inc. since the jury's verdict, neither Cingular nor BCGI has a license to practice Freedom's patented system. Contact information for interviews: Bill Price -- 818-519-0570 Bill Urquhart, Quinn Emanuel Urquhart Oliver & Hedges -- 818-519-8751 or call Anne Sage at 310-396-2400 to arrange an interview

Source: Business Wire

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