Judge Upholds $128 Million Verdict in Patent Dispute

A judge on Thursday upheld a $128 million patent infringement verdict that threatens to bankrupt a provider of billing services to some of the nation's largest cellular carriers. U.S. District Judge Edward F. Harrington denied Boston Communications Group's motion to reduce a jury's damages award, made in response to a suit by Freedom Wireless, a privately held developer of technology used for prepaid wireless billing.

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A judge on Thursday upheld a jury’s $128 million patent infringement verdict that threatens to bankrupt a provider of billing services to some of the nation’s largest cellular carriers. U.S. District Judge Edward F. Harrington denied Boston Communications Group Inc.’s motion to reduce a jury’s May 20 damages award. The award was made following a 51-day trial in a lawsuit brought by Freedom Wireless Inc., a privately held developer of technology used for prepaid wireless billing. After the verdict, Harrington presided over a subsequent bench trial to consider Boston Communications’ claims that the verdict could not be enforced because the patents Freedom Wireless obtained were allegedly based on incomplete and deceptive information. But Harrington found no merit to BCGI’s claims that Phoenix-based Freedom Wireless failed to accurately state in its applications what related technologies existed when it sought patent protection in 1994. “In light of all the circumstances, Freedom’s conduct is not so culpable that its patents should be held unenforceable,” Harrington wrote in his ruling in the 5-year-old lawsuit. The judge wrote that Bedford, Mass.-based Boston Communications failed to prove the patents “were obtained by inequitable conduct.” Boston Communications is expected to be held liable for the bulk of the $128 million award in the case brought against the company and co-defendants Cingular Wireless, AT&T Wireless, CMT Partners and Western Wireless. Freedom Wireless technology, developed by inventors Douglas Fougnies and Dan Harned, allows customers making prepaid calls to avoid dialing identification codes or calling toll-free numbers. Boston Communications shares fell 16 cents to close at $1.72 Thursday on the Nasdaq Stock Market after Harrington’s ruling was released. The stock has traded in a 52-week range of $1.28 to $10.22. The company said it was preparing to issue a statement on the verdict Thursday afternoon. Bill Price, an attorney for Freedom Wireless, said the damages amount was merited. “A $128 million damages award in a case where the defendants obtained over $1.5 billion in revenue by using these patents is certainly reasonable, as the judge recognized in denying their motion,” Price said. After the May jury verdict, Boston Communications warned it might not be able to continue operating or might seek bankruptcy protection if it failed to reverse the decision or failed to reach a deal to license technology from Freedom Wireless. The damages award exceeds the 400-employee company’s total revenue last year by more than $20 million, and could rise with attorneys’ fees and other charges. About 90 percent of Boston Communications’ total revenue comes from its U.S. prepaid wireless services to customers including Verizon Wireless, Cingular and Nextel Communications. Prepaid cellular customers pay for blocks of minutes and typically get standard features like voice mail and text messaging. But there are no credit checks and often no activation fees. Customers who use up their minutes can simply buy more or choose not to do so. Copyright 2005 Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.

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