Mahindra Satyam's board yesterday, decided to agree for the final settlement of lawsuits filed by former client Upaid Systems, by paying $70 million (Rs. 336 crores). Bar & Bench traces the dispute back to its origins in 1996.
Mahindra Satyam's board yesterday, decided to agree for the final settlement of lawsuits filed by former client Upaid Systems, by paying $70 million (Rs. 336 crores). The press release issued by Mahindra Satyam states that the company would make the first payment of $45 million (Rs. 216 Crores) to Upaid, within 10 days of obtaining necessary regulatory approval, and the remaining $25 million (Rs. 120 Crores) within 12 months of making the first payment. Bar & Bench takes a look at the dispute that culminated in a settlement.
1996: Simon Joyce and Prafulla Gupta, the co-founders of Upaid, developed the idea of converting any telephone into a de facto pay-phone through the use of a pre-paid account associated with a caller personal identification number (PIN). To exploit the idea commercially, they outsourced the development of the computer based external platform and related software to Satyam which could carry out the software development work.
1998: Upaid decides to apply for a patent to the United States Patent and Trademark Office ("USPTO"). Consequently, Upaid will have to demonstrate "unity of ownership" of the intellectual property rights in the invention. Therefore, Upaid has to procure the IPRs vested in Satyam or their employees. In order to maintain the priority filing date which such a provisional application achieves a full "utility" patent application had to be filed within 12 months of the provisional application. However, Satyam's practice is to transfer to its customers the intellectual property rights to the products it creates.
1999: Satyam sends the executed employee assignments to be filed with USPTO. Accompanying the application were the Assignment Agreement and the employee assignments, which collectively demonstrated Upaid's unity of ownership.
2001: The Combined Declaration filed with the USPTO, which grants the patent (the "947 patent").
2005: Upaid files patent infringement proceedings in the Eastern District of Texas against Qualcomm and Verizon Wireless, on the grounds that they have developed software platforms and were offering network services, thereby infringing Upaid's 947 patent and subsequent patents.
Upaid obtains the advice of a handwriting expert who opines that the signatures on these documents were almost certainly forged. Mambakkam had in fact sold his rights in the inventions to Verizon.
2007: Due to the forgery, Upaid is forced to settle the infringement proceedings on extremely unfavorable terms with Qualcomm and Verizon Wireless.
Upaid is represented by lead attorney Guy Harisson along with Washington DC based firm Foley & Lardner who were represented by IP litigation Partners Andrew Rawlins [pictured, top right] and John Feldhaus [pictured, bottom right] along with litigation associate Mathew Alexander Smith.
Qualcomm is represented by Latham and Watkins. San Francisco based IP Partner Charles Crompton, Los Angeles Partner Bruce D. Kuyper along with Carl Roth of the Roth Law Firm represented Qualcomm.
Verizon is represented by Baker Botts with their IP Litigation Partner Bryant Carroll Boren taking lead with IP Partner Aaron Douglas Davidson and Litigation Partner Timothy S. Durst assisting him. Another Texas Law Firm Potter Minton also represented Verizon with Partners John Frederick Bufe and Michael Jones taking lead.
Sources familiar to the litigation inform us that at one point, more than more than 100 counsels were working on this litigation.
2007: Upaid files a lawsuit against Satyam in the United States District Court for the Eastern District of Texas. Satyam denies responsibility for the forgeries, and it is common ground that the preliminary issues should be determined on the basis that it is not known who was responsible for the forgeries.
Upaid retains counsels from the Qualcomm Verizon litigation for the Satyam litigation too and adds the Patton Boggs team. Patton Boggs takes the lead with litigation partner Patrick Long [pictured, right].
Satyam initially starts with Akin Gump Strauss Hauer & Feld's litigation Partner Andrew Rossman [pictured, extreme left] taking the lead. After Andrew Rossman moved from Akin Gump to Quinn Emanuel Urquhart Oliver & Hedges, Satyam too moved from Akin Gump. Diane Hutnyan [pictured, left], Litigation Partner at Los Angeles office of Quinn Emanuel joins the Satyam Litigation team.
Earlier this year, Satyam replaced New York firm Wachtell Lipton with preferred advisors, Jones Day. Satyam was previously being represented by Warren Stern, head of Litigation at Wachtell Lipton Rosen & Katz, a top-tier M&A firm in New York. Jayant Tambe, a securities litigation expert and Partner at Jones Day, is heading the team to defend Satyam in its class action suits filed in New York.
Some settlement agreements between Upaid and Satyam, not relevant to the Texas proceedings, have been appealed to the England and Wales Court of Appeal (Civil Division). Queen's Counsel, Geoffrey Vos and Anna Boase argued on behalf of Satyam who were represented by London based Lawrence Graham. Queens Counsel David Foxton and Emily Wood argued on behalf of Upaid who were represented by Freshfields Bruckhaus Deringer.
2009: Mahindra Satyam's Board approves an out-of-court settlement.
Bar & Bench tried to contact the counsels and firms involved with the transaction. With the settlement motion not yet filed before the District Judge, the law firms declined comment.
With Upaid matter now settled, Mahindra Satyam can focus on its class action suits that have been filed in New York.