Patent fracas might disrupt prepaid wireless services

Over 3 million prepaid wireless customers could lose service in 90 days, if a court denies a patent lawsuit appeal from Boston Communications Group Inc. (BCGI).

As part of an ongoing lawsuit filed by Freedom Wireless Inc. against BCGI, Cingular Wireless Inc. and other wireless operators, the U.S. District Court for the District of Massachusetts ordered BCGI to stop selling some of its prepaid service bureau offerings to operators. BCGI has 90 days to comply and during those 90 days it is required to pay Freedom Wireless a license fee of $0.02 per minute of airtime sold using its service.

Cingular Wireless serves around 400,000 prepaid customers using the BCGI service, and other operators use it to serve an additional 2.7 million customers.

In May, the court ruled that BCGI had willfully infringed on Freedom Wireless patents and thus the defendants are responsible to pay Freedom Wireless $128 million for past infringement. This week, the court granted Freedom Wireless’ request to add prejudgement interest to that figure, bringing the total liability to $148.1 million.

On Monday, BCGI said it will file an emergency motion to allow it to continue selling the services while it appeals the suit with the court. If the motion is denied, BCGI vows to appeal that decision in a higher court. BCGI expects the appeals process could take 12 months to 18 months or longer.

The other wireless operators named in the original ruling were AT&T Wireless Services, which has since been bought by Cingular, CMT Partners and Western Wireless Corp., which has been acquired by Alltel Corporation Inc.

In a statement, BCGI said that it didn’t infringe on Freedom Wireless’ patents and that the size of the award is unreasonable in light of the royalties that any company would have paid to license the patents.

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Jim Love, Chief Content Officer, IT World Canada

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