SmartSky, in Legal Battle, Faces Further Delays

 - September 15, 2020, 10:27 AM

SmartSky Networks has become embroiled in a legal dispute involving a major equipment vendor for its planned air-to-ground network and said the launch of the network will now be pushed back until 2021. The communications specialist, which is based in North Carolina’s Research Triangle, has terminated a contract and filed a lawsuit against its former radio contractor, Wireless Systems Solutions (WSS), alleging improper actions and misappropriation of intellectual property.

The lawsuit came after WSS, also based in the Research Triangle, had filed a lawsuit against SmartSky over a confidential dispute between the two entities. WSS vehemently denied the SmartSky allegations.

SmartSky listed WSS, two related entities (DAG Wireless LTD and DAG Wireless USA), and three of the company’s senior leaders for alleged improper actions. “We have pledged to defend our intellectual property vigorously because it is critical to our success,” said SmartSky president Ryan Stone. “In this situation, WSS failed to complete what it was contracted to do for SmartSky. Simultaneously, we believe WSS attempted to sell our product as its own, including through an alter-ego company formed after we began working with WSS yet involving the same people.”

SmartSky, which was established in 2011, has worked with WSS on the network for the past two years. It noted in the lawsuit that it paid WSS over $30 million to develop, build, test, and produce components to complete SmartSky’s end-to-end, air-to-ground wireless communication network. “WSS took the money,” the lawsuit alleges, and “instead funneled SmartSky intellectual property, equipment, and materials to a family-owned alter ego, DAG, to build a competing product that they intend to market and sell as their own.”

The lawsuit says DAG “claimed that it developed the very ATG network components that SmartSky paid WSS tens of millions of dollars to develop and build, and is actively marketing and offering to sell products based on this claim.”

For SmartSky, the dispute results in another delay for the network that was originally hoped to launch in 2016 but was delayed until 2018 and then 2020 as the company worked through equipment issues and rounds of fundraising. The network has been built out and tested and SmartSky has coordinated on multiple aircraft supplemental type certificates for its use. In announcing the lawsuit, the company said it recently closed on $40 million in additional equity funding and $10 million in new debt and now expects to launch next year. “We’re transferring WSS’s former work scope to contractors who have performed well for us in the past on other aspects of our program.”

WSS called the SmartSky lawsuit a retaliatory action responding to the WSS filing on September 3. “We categorically deny the allegations that SmartSky has put forward in the second-filed lawsuit and will be responding accordingly,” said WSS v-p Susan Gross. “However, we are pleased that SmartSky has released this information, thereby allowing the issues between the two entities to be adjudicated in a proper fashion.”

WSS, in fact, has just revealed that it is offering its own air-to-ground airborne connectivity system, VelocityXG. Like SmartSky, the WSS network uses unlicensed spectrum and beam-forming technology to deliver its airborne connectivity service.