Garmin faces investor lawsuit over failed LightSquared projectPosted on
Investors filed a $1.9 billion lawsuit against three GPS receiver manufacturers, including Garmin International, over LightSquared, a now bankrupt company that still hopes to build a wireless broadband network across the United States.
The investors, led by Harbinger Capital Partners, are seeking compensation for losses incurred when the Federal Communications Commission denied LightSquared permission to build a wholesale mobile satellite communications network.
The suit, filed Friday, alleges that Garmin International, Deere & Co. and Trimble Navigation, plus the U.S. GPS Industry Council and the Coalition to Save Our GPS, are liable for failing to warn investors about the problems that have forced a halt to the project.
The filing argues that GPS manufacturers knew of plans to use the frequencies in question for a ground-based network, but did not tell the investors the network would overload receivers, irreparably hampering GPS service, according to a report by Inside GNSS, which reports on the communications industry.
The plaintiffs also argue that GPS manufacturers were effectively designing their devices to improperly use spectrum owned by LightSquared creating a problem with no practical solution once thousands of legacy GPS receivers were in place, according to the report.
Had they been informed of these problems, the plaintiffs argue, they never would have incurred these costs or made their subsequent investments in the new network.
LightSquared, based in Reston, Va., filed for Chapter 11 bankruptcy protection in May 2012 after failing to reach a debt restructuring deal with its creditors. LightSquared listed assets of $4.48 billion and debt of $2.29 billion in its filing in U.S. Bankruptcy Court in Manhattan.
A coalition of businesses reliant on GPS and leading manufacturers of GPS equipment known as the GPS Innovation Alliance, which declares itself to be the voice of the U.S. GPS industry, has since replaced both the U.S. GPS Industry Council and the Coalition to Save Our GPS, which were established in March 2011 in response to a conditional waiver the FCC granted to LightSquared.