Boston Communications settles patent dispute

Boston Communications Group, severely hobbled in recent months by a patent lawsuit brought about by Freedom Wireless against it and several wireless operators who use BCGI's prepaid technology, said it will pay Freedom Wireless $55 million in damages and unspecified future royalties. In March 2000, Freedom Wireless--a four-employee company with no business operations, services, software or products for sale--filed suit against BCGI and its wireless carrier customers. In May 2005, a court ruled in favor of Freedom Wireless, ordering BCGI to pay $128 million in damages. BCGI appealed the judgment while Freedom Wireless filed more lawsuits against it and carriers it supplied prepaid technology to. BCGI was headed for bankruptcy if it didn't succeed in its appeals.  

Under the settlement, BCGI said that its wireless-carrier co-defendants will pay an additional $32 million to Freedom Wireless. Co-defendants include major operators Cingular Wireless, Sprint Nextel and Alltel. Verizon previously settled with Freedom Wireless for undisclosed terms. BCGI also will pay Freedom Wireless 5 percent of any increase in the average market capitalization of its stock during the first six months of next year compared with the first six months of this year. BCGI also has something else to worry about. The SEC has launched an inquiry into BCGI's dating of options grants to executives in the period from 1998 to 2002.

To read more about BCGI's patent settlement:
- read this article from The Wall Street Journal (sub. req.)