Ericsson sued for $330 million in trade secrets case

(Reuters)—Ericsson, the world's largest telecommunications network equipment maker, has been sued for more than $330 million by a Massachusetts broadband network company that accused it of stealing trade secrets and trying to drive it out of business.

Airvana Network Solutions Inc., founded in 2000 by former Motorola Inc. executives, said Ericsson secretly joined with a Korean partner to develop "knock-off" hardware based on Airvana technology, and which could then be sold to wireless carriers Verizon Wireless and Sprint Nextel Corp.

"It is a classic case of a bigger company trying to take advantage of its size against a much smaller company," Airvana Chief Executive Randy Battat said in a phone interview. "They wanted to run different software on hardware derived from our technology."

He said privately held Airvana generates "hundreds of millions of dollars" of annual revenue from Ericsson.

An Ericsson spokeswoman declined to discuss the lawsuit, but said the Kista, Sweden-based company is "committed to supporting our customers and will take appropriate action to protect both their interests and those of Ericsson."

In its complaint filed with the New York state court in Manhattan, Airvana said Ericsson breached its contract in an effort to extract concessions, or force it to fold or sell itself to the Swedish company for an artificially low price.

Airvana also accused Ericsson of hiring one of its software engineers in violation of a noncompetition agreement.

"If Ericsson is able, even temporarily, to displace Airvana with a wrongfully developed 'in-house' product, Airvana will face an immediate and precipitous decline in its revenues and may be rendered unable to meet its obligations," Airvana said.

Battat said the $330 million is derived from years of discounts that Airvana had given Ericsson, having believed that "we were in with them for the long haul."

Airvana also seeks 9% annual interest from mid-2010, when Ericsson's product had supposedly "reached the 'market ready' planning stage."

Sanjeev Verma and Vedat Eyuboglu co-founded Airvana and remain with the Chelmsford, Massachusetts-based company. Battat is also a Motorola alumnus. Airvana said the companies had agreed that any litigation be conducted in New York.