Harbinger Capital Partners and other entities associated with the LightSquared high-speed wireless Internet access system have filed a lawsuit against Deere & Company, Garmin International, Trimble Navigation, The U.S. GPS Industry Council and The Coalition to Save Our GPS.
The complaint, filed in federal court in New York City on August 9, claims that the defendants failed to disclose information about GPS interference problems caused by the frequency spectrum that LightSquared was designed to use. It alleges that the GPS companies engaged in fraud, misrepresentation, federal securities law violations, and deceptive acts and practices, and seeks more than $1.9 billion in damages.
In their filing, LightSquared and the plaintiffs “(and their predecessors)” say they worked with the makers of GPS products “from 2002 to 2009 to resolve issues relating to spectrum ‘interference’ that might occur from plaintiffs’ use of the spectrum authorized by the FCC [Federal Communications Commission].” This interference problem, they say, resulted from the GPS spectrum existing between two separate segments of spectrum that were owned by LightSquared. “Plaintiffs (and their predecessors) incurred substantial costs to solve all earlier problems with spectrum interference. Indeed, defendants commended them for doing so, calling them ‘good spectrum neighbors.’”
Yet, according to the plaintiffs’ allegations, it wasn’t until late 2011 and last year that the GPS industry revealed “that defendants designed their GPS products to use the very same spectrum the FCC assigned to plaintiffs and that plaintiffs’ authorized use of that spectrum would cause defendants’ GPS products to malfunction.” As AIN went to press, the GPS industry had not yet responded formally to the complaint.
Suit: Harbinger Denied Complete Information
In its complaint, Harbinger insists it wouldn’t have spent so much money on LightSquared had the GPS makers revealed what they revealed in 2011 and 2012. It wasn’t until LightSquared was about to go live that “defendants began to disclose that their GPS products would cease to work if plaintiffs used the spectrum in the manner already authorized by the FCC,” according to the filing.
The plaintiffs further allege that GPS manufacturers continued to make GPS receivers with “vulnerabilities” that could cause the receivers to cease working if LightSquared was deployed as authorized by the FCC. They accuse the manufacturers of knowing, since 2003, that their products suffered from these vulnerabilities. “This was done to increase defendants’ profits,” Harbinger claims.
“Defendants also belatedly disclosed that a small percentage of these poorly designed, cost-cutting GPS receivers were embedded in critical safety devices. According to defendants, this meant that, if plaintiffs’ new network were allowed to go live, GPS products could fail in a way that caused catastrophes such as plane crashes.” Yet the GPS industry has never substantiated “their alarmist claims,” according to the lawsuit. And the result of these claims, it continues, is that LightSquared was forced into bankruptcy in May last year and the investors now stand to lose everything they invested. “Plaintiffs never would have made this investment if defendants had told the truth earlier,” they allege.
Asked about Harbinger’s filing, Garmin responded, “We do not comment about any pending litigation.” The GPS industry offered AIN this statement from Jim Kirkland, Trimble v-p and general counsel: “The Harbinger lawsuit is an attempt to avoid responsibility for the consequences of LightSquared’s plan to build a high-powered mobile network in the spectrum adjacent to GPS, despite prior FCC restrictions. More than a year of intensive study, involving government as well as private GPS users, determined that LightSquared’s proposed network would have interfered with millions of GPS devices used for a wide variety of critical purposes. This interference resulted from the characteristics of LightSquared’s new plan for use of satellite spectrum, not the design of GPS devices. The responsibility for Harbinger’s losses rests squarely with Harbinger. The lawsuit is lacking in merit and we will vigorously defend [against] it.”
In its complaint, Harbinger explains that the LightSquared broadband Internet system was authorized to use spectrum in two blocks, including most of 1525 to 1559 MHz and most of 1626.5 to 1660.5 MHz. The GPS band (Radionavigation Satellite Service or RSS) covers 1559 to 1610 MHz.
LightSquared was eventually slated to employ 36,000 ground-based transceivers and the SkyTerra 1 satellite to deliver broadband wireless Internet service throughout the U.S. A central issue in the lawsuit is Harbinger’s claim that the FCC in 2010 required that LightSquared make “extensive use of terrestrial transmissions,” which had already “been authorized in 2003, 2004 and 2005.” Because of this early authorization, Harbinger alleges in the lawsuit, “In each year specified, defendants had all the information they needed to know the full extent of what they claim today are insurmountable obstacles to deployment of the Harbinger-sponsored network.”
The complaint gets into far more detail, including explanations of how the spectrum assigned to LightSquared relates to the GPS RSS band and how interference problems can be mitigated. Harbinger feels that it was diligent in providing “substantial technical detail” about LightSquared early and often. Yet Harbinger claims it needed information on GPS receivers that wasn’t made available.. “If some non-public feature of a receiver made it susceptible to certain interference from a transmitter operating in neighboring spectrum, Harbinger had no way of knowing that and had to rely on defendants to disclose that fact.”
A reason that GPS receiver information is unavailable, according to Harbinger, is because the FCC doesn’t regulate receivers, but does approve transmitters and transceivers. “For this reason, the operational parameters of receivers like the GPS devices defendants manufactured are kept proprietary and confidential. Thus, to determine whether there can be issues between a given receiver and transmitter (or transceiver), the manufacturer of the receiver has all the information but the manufacturer of the transmitter does not.”
Harbinger goes on to assert, “Transmitters on the Harbinger-sponsored network can be adjusted to transmit signals only within the assigned spectrum. If this is not done effectively, ‘Out-of-Band Emissions’ (OOBE) will transmit into neighboring spectra and cause ‘interference’ with reception of desired transmittals.” There is also Out-of-Band-Receptions (OOBR) interference, which means that a receiver is unavoidably “listening in” to transmissions. Transmitter manufacturers like LightSquared can make their broadcasts minimize OOBE interference, and this was done. GPS manufacturers bear the burden of making their systems resistant to OOBR and better able to receive the desired signals, according to Harbinger.
The complaint states, “…if the problem involves OOBR, then the cause is not that the transmitted signal is straying outside of its assigned bandwidth. Instead, the cause is that the receiver of the signal is not limiting its reception to its assigned bandwidth. In other words, OOBR has nothing to do with the transmission of a signal outside its designated limits. To the contrary, the OOBR issue arises when one party’s receiver ‘listens in’ to another party’s spectrum and the receiver is ‘overloaded’ by the authorized signal in that band. This overload is not inevitable. It can be avoided by filters and other technical fixes.”
The GPS industry received notice of the LightSquared network’s plans “in a series of rulings in 2001-2005 and another in 2009,” the plaintiffs assert, specifically having to do with converting spectrum originally assigned to primarily satellite-based services to what ultimately became the 36,000-station terrestrial network. “At each step, the FCC was required to and did give public notice, receive comments and objections, and publish final decisions…Defendants raised some objections, but only on limited issues, all of which were resolved in private agreements that were then submitted to the FCC.”
Harbinger alleges in the complaint that the GPS manufacturers were able to shut down LightSquared last year by objecting to OOBR-related interference, not OOBE. The OOBE issues were resolved in “multiple agreements with Harbinger and its predecessors between 2002 and 2009…
“To the contrary, all of defendants’ belated objections–and the sole reason that the Harbinger-sponsored network has been shut down–are that the defendants’ GPS products were designed to rely on OOBR. In other words, defendants are now objecting to the Harbinger-sponsored network because they designed their products to ‘listen in’ to the spectrum that the FCC assigned to the Harbinger network even though defendants themselves have no right to use that spectrum.
“As has only recently become clear, the reason defendants have their present OOBR problem is the deliberate choice they made over the past eight years to manufacture and sell receivers that can only function if they can listen within the LightSquared Band and that cannot function if LightSquared uses its band as authorized in 2003, 2004, 2005, 2009 and March 2010.”
Harbinger supports its assertion that GPS manufacturers were aware of yet didn’t reveal the OOBR problem in this paragraph: “Defendants’ entire story was not told until late 2011 and 2012, at which time it became clear that they had concealed the OOBR problem from the beginning. For example, on August 22, 2011, Deere sent a letter to the FCC, forwarding a power-point Deere said it used in an August 18, 2011, presentation to the FCC (to which Harbinger was not a party). In that document, Deere finally admitted that OOBR had been a problem ‘from the beginning.’ The reason for the problem, Deere admitted, was that Deere’s receivers had been deliberately manufactured to operate on what Deere euphemistically called ‘wide-band’ reception. That is, the receivers were designed to listen in on signals outside the GPS band and within the LightSquared Band. On September 15, 2011, Garmin and Trimble jointly submitted a similar letter to the FCC along with a similar power-point presentation. In their joint submission, Garmin and Trimble similarly revealed the fact that their ‘embedded base’ of GPS products (i.e., the products they had sold long ago) could not function without ‘full-band’ reception.”
According to the plaintiffs, it was the GPS industry’s objections to LightSquared that prompted the FCC to suspend approval to deploy the broadband network and brought about LightSquared’s subsequent bankruptcy.