Leap Wireless International Inc. filed a lawsuit claiming that MetroPCS Communications Inc. had stolen its business plan-only to be accused of stealing in its own right. The lawsuit could be part of a major legal assault by Leap against small- and mid-sized wireless carriers around the country that are trying to emulate the all-you-can-eat price plans.
In its filing, Leap, which offers its flat-rate, unlimited calling plan in more than 40 markets under the Cricket brand and claims around 1.8 million customers, said the U.S. Patent and Trademark Office in November 2004 issued it Patent No. 6,813,497 titled “Method for Providing Wireless Communications Services and Network and System for Delivering Same.”
Leap claims that MetroPCS, which offers a similar service in about a half dozen markets and claims more than 2 million customers, “has caused and will continue to cause Leap and Cricket substantial damage and irreparable harm by virtue of its past and continuing infringement of the ‘497 patent. Leap and Cricket will suffer further damage and irreparable injury unless and until it is enjoined by this court from continuing such infringement,” Leap stated.
In a substantially longer counterclaim MetroPCS struck back denying any wrongdoing and claimed that the idea of a low-cost, flat-rate carrier specializing in limited, local coverage had originated with its founder and current chief executive officer, Roger Linquist more than a decade ago.
“Unfortunately, MetroPCS’ innovative business model and services, and the secrets which make them work … have been wrongfully misappropriated and converted by several current and former officers and employees of Leap and Cricket (and also the so-called inventors of the ‘497 patent) for use in Leap’s and Cricket’s business,” MetroPCS claimed in its filing. “These innovations-misappropriated and converted from MetroPCS-are now being promoted as successes for Leap and Cricket.”
According to the counter-complaint, MetroPCS said Linquist came up with the idea to offer a low-cost wireless service when he was chairman of PageMart in 1994. Shortly thereafter, Linquist left PageMart to form General Wireless Inc., which later became MetroPCS, to bid in the Federal Communications Commission’s planned auction of 1.9 GHz spectrum.
To help realize his plans, Linquist began speaking with several infrastructure vendors, including Qualcomm Inc., regarding low-cost equipment for the service. MetroPCS claims that while the discussions were conducted under non-disclosure agreements, several of the Qualcomm executives included in the talks would later steal the low-cost service idea in forming Leap, which was spun-off from Qualcomm in 1998.
MetroPCS goes on to claim that while it was mired in trying to find financing for its low-cost wireless plans, Leap launched a similar service that quickly expanded to several dozen markets by 2002. GWI’s financial problems, which included a fight with the FCC over how much the company owed for spectrum licenses, culminated with GWI emerging from bankruptcy protection under the MetroPCS name.
MetroPCS’ complaints go on to allege that while Leap’s service was similar to its own plans, Leap was not able to make it work financially and was forced to file for bankruptcy protection in 2003. After Leap emerged from bankruptcy in 2004, MetroPCS alleges that Leap executives disguised possible merger talks with MetroPCS as a way to gather additional proprietary operational secrets from MetroPCS to help Leap better manage its costs. MetroPCS claims merger talks between the two companies took place in 2003 and 2004, with the most recent talks taking place late last year.
“Since MetroPCS does not directly compete with Leap, it did not know that Leap had misappropriated its information,” MetroPCS told the court. “Once again.”
A number of smaller regional wireless operators have since launched similar services, including Pocket Communications and Revol Wireless.
Leap released a statement in response to a request for comment that said: “We believe our patent is valid and we intend to continue our suit and to vigorously defend against the counterclaim.” MetroPCS representatives could not be reached for comment.
RCR Wireless News Washington, D.C., Bureau Chief Jeff Silva contributed to this report.
