AT&T Hit with Patent Infringement Lawsuit over Mobile Voice Encryption Technology

By Peter Bernstein May 07, 2014

There is little doubt that thanks to all of the headlines, securing privacy of voice communications over mobile networks has become a priority. In fact, studies have shown that average consumers take the privacy of all their communications, particularly voice, very seriously.  And, while businesses are employing encryption technologies to protect themselves from snooping, the mass market represents a market with huge potential.

With this as context, Melville, NY-based CopyTele, Inc., a company that protects the rights of inventors through patent monetization and patent assertion, through its wholly owned subsidiary, Encrypted Cellular Communications Corporation (“EC3”), has filed a patent infringement lawsuit against AT&T. The suit is  in connection with EC3’s patented Encrypted Cellular Communications technology whose patent expires in 2024. This represents the sixth lawsuit launched by CTI since implementing its new business model in January of 2013.

Robert Berman, CTI’s president and CEO stated, “CTI was a true pioneer in developing encryption technologies, having supplied state of the art encryption devices for use by the U.S. military in both Gulf wars. Similar technologies are now being used for secure cellular communications in both the business and government sectors. With over 300 million wireless subscriptions in the U.S., we believe that our EC3 assertion campaign has enormous potential”.

The reason AT&T has been the target for patent infringement action is that it charges its customers a one-time activation fee of $115 per device, and monthly service charges of $39.99, for its Encrypted Mobile Voice service, in addition to data and wireless charges.

As CTI explains, “’The potential to collect incremental activation fees, incremental service charges, and demand higher prices for consumer based devices containing encryption based hardware and software, mobile service providers and consumer device manufacturers are expected to next roll out encryption devices and services across all consumer markets, in an effort to profit from consumer privacy concerns.” In short, this is a big market, and CTI believes it is entitled to compensation for infringement on its technology by AT&T.   

CTI’s subsidiary companies have already entered into 9 revenue producing license agreements across 3 of its patent assertion campaigns, and now have 33 lawsuits across 6 patent assertion programs, including E-Paper Electrophoretic Displays, Nano Field Emission Displays, Key Based Web Conferencing Encryption, J-Channel Window Frame Construction, Loyalty Conversion Systems, and Encrypted Cellular Communications.

What makes this case noteworthy is that it is part of the intense debate about patent reform, and the role of so-called “patent trolls.” Critics contend that these trolls are not interested in productizing the intellectual property (IP) they have rights to but are only interested in collecting fees when they see infringement opportunities. Companies such as CTI, claim they are doing what the likes of Apple, Microsoft, Blackberry, Ericsson and Sony (owners of Rockstar Bidco, which purchased Nortel's patent portfolio for $4.5 billion in 2011) do, i.e., they choose litigation as the preferred means to monetize their troves of acquired IP. In fact, they argue they are in effect providing a valuable service by asserting that regardless of a company’s size, IP is IP, and when it is infringed upon there should be consequences that could have a chilling effect on innovation.

While the painful process of modifying patent laws to reflect the realities of today’s markets, particularly in regard to tech, still looks like it could take years, lawsuits such as this one that strike at something as important as communications privacy if nothing else draw attention to the need to accelerate policy-maker interest in taking action.

Edited by Maurice Nagle
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