Wednesday, February 8, 2012

Airvana sues Ericsson over 'knock-off' tech

By Rodney H. Brown

Airvana Network Solutions Inc. says in a lawsuit that Swedish phone maker Ericsson A.B. has been trying to drive it out of business by secretly developing “knock-off” versions of Airvana tech that Ericsson had been licensing. Airvana is looking for $330 million in damages.

Chelmsford’s Airvana said in a release Wednesday that it had filed suit in the New York State Supreme Court looking to prevent Ericsson from selling a product that it says is based in proprietary Airvana technology. The suit says that Ericsson had teamed up with an unidentified Korean partner to develop a competing 3G wireless device that is based on “misappropriating Airvana’s technology” in an effort to no longer have to sell Airvana-based devices to CDMA-based cell carriers such as Verizon.

Randy Battat, president and CEO of Airvana, said in an interview that he believed that Ericsson made its moves “in order to probably drive us out of business.”

Supplying 3G data technology to carriers using the CDMA network has been lucrative, Battat said.

“This business of supplying the broadband mobile technology that is used in the Verizon and Sprint networks has been a very good business for us,” he said.

The history of the technology is fairly convoluted, but the short version is that Airvana licensed the technology in question to Nortel Inc., and when Ericsson bought the parts of Nortel related to wireless technology, that license came to the Swedish company. In the suit, Airvana claims that Ericsson has been conducting a secret in-house project since 2010 to make an Ericsson device that it can sell without having to pay the licensing fee, but that is actually based on Airvana’s licensed hardware and software for handling 3G data.

The lawsuit also contends that Ericsson hired a “key Airvana engineer” without disclosing that it was now seeking to make a competing product, which would have made the move a violation of the engineer’s non-compete agreement.

Battat said in the release, “Ericsson’s behavior is a classic example of a giant multinational using its size and position to extract the profits from a smaller, innovative American company. They are brazenly doing so in violation of both our contractual agreement with them and the trust we placed in them when we licensed our proprietary technology.”

Airvana was a public company until late 2009, when it was acquired by 72 Mobile Holdings LLC, a company created by a group of capital investment firms, in a deal worth approximately $530 million. The group consisted of S.A.C. Private Capital Group LLC, GSO Capital Partners LP, Sankaty Advisors LLC, ZelnickMedia.

Since the buyout, Airvana has been split into two essentially separate companies, Battat said in the interview. Airvana LLC is responsible for developing and marketing its femtocell products, and is doing quite well, he said. Airvana Network Solutions is the name of the business making the 3G technology that is suing Ericsson, he said.

“Ericsson is really our only customer,” Battat added. Between the two companies, Airvana employs abut 200 in Massachusetts and 400 globally, he said.

No one returned a call to the Ericsson communications department immediately.