Intelsat has accused OneWeb of breaching contracts, committing fraud and of stealing confidential and proprietary information, Spacenews reported, saying Intelsat has filed a case with the New York Supreme Court, seeking unspecified compensatory damages and a stop to the OneWeb and SoftBank actions that violate contracts with Intelsat.
Violation of exclusive agreement, unlawful use of confidential information
In short, Intelsat alleges OneWeb has not respected their exclusive distribution agreements, that it has with other, violating distribution deals, deprived Intelsat of expected revenues, and that it has, and plans to, use confidential Intelsat information for its own purposes.
The longer story reaches back to Intelsat’s USD 25 million investment in OneWeb in 2015. Under the agreement signed then, Intelsat customers would get access to OneWeb communication services. A further distribution deal signed later that year made Intelsat the sole and exclusive worldwide and regional distributor for OneWeb communications services in four markets, namely aviation, maritime, oil and gas, and the US government.
An investment in 2016 by SoftBank changed the landscape. With the deal, SoftBank took a 40 percent stake in OneWeb, which then agreed to let its new investor buy 100 percent of its future satellite capacity and become its exclusive global distributor of communication services. The agreements between OneWeb and SoftBank were “never discussed or cleared with Intelsat,” the complaint noted. When Intelsat objected in 2016, OneWeb, SoftBank and Intelsat agreed to amend the original cooperation agreement between OneWeb and Intelsat. Under the new agreement, Intelsat would maintain its exclusive distribution rights but procure OneWeb communications services through SoftBank. Based on this agreement, Intelsat said it provided, at the behest of OneWeb and SoftBank, financial, technical and other support to OneWeb, as well as proprietary and confidential technical and customer information related to its targeted markets.
In 2017, OneWeb and Intelsat started looking into merging their operations. With the deal under discussion, SoftBank would invest up to USD 1.5 billion in Intelsat, which would combine with OneWeb to form a single satellite provider. The merger fell through in June 2017 when Intelsat debt holders did not agree to the deal. After the failure, OneWeb and SoftBank started talking about establishing a relationship beyond the four markets listed in Intelsat’s original agreement with OneWeb. For example, they contemplated joint marketing of combined communications services for the connected vehicle market, the complaint said.
These talks went on beyond end March 2018, a date listed in the amended agreement between OneWeb, SoftBank and Intelsat. That document said SoftBank agreed to sell OneWeb Services to Intelsat “pursuant to a master service agreement to be negotiated and agreed between Intelsat and SoftBank on or prior to March 31, 2018,” the complaint said. But Intelsat noted that although that date passed, at no point during negotiations did anyone say the cooperation agreement between OneWeb, Intelsat and SoftBank “had been terminated, abandoned or was of no continuing effect or force.” And yet, Intelsat’s dialogue with SoftBank stopped suddenly in April 2018.
In February 2019, OneWeb informed Intelsat it “no longer believed the parties’ discussions about a broader commercial arrangement would be fruitful.” Intelsat said it then received a “cease and desist letter” in July from OneWeb, demanding it “refrain from representing to distributors that Intelsat possessed any exclusive distribution rights” to OneWeb capacity in specific markets. Before sending that letter, OneWeb had already been negotiating for the purchase and resale of its capacity with distributors and customers, Intelsat said in the complaint. On its website, OneWeb lists four markets it intends to serve: aviation, maritime, enterprise and government customers.
Finally, Intelsat claims that OneWeb made improper competitive use of the confidential information it had earlier provided, and that OneWeb and SoftBank “conspired to utilize Intelsat’s confidential and proprietary information” for purposes other than carrying out their agreement with Intelsat.
