NexGen City sues Motorola, MeshNetworks for merging

Feb 2, 2005 6:35 PM, By Donny Jackson

Dallas-based NexGen City has filed a $100 million lawsuit in a Texas state court alleging that Motorola and its acquisition, MeshNetworks, conspired to create a monopoly in the peer-to-peer wireless market for public-safety and homeland-security applications.

In November, Motorola announced its merger with MeshNetworks, the industry leader in deployed wireless networks using the resilient mesh architecture developed by the military. Terms of the deal were not announced, but officials said that MeshNetworks’ existing customer base would continue to be supported.

But the merger—and an August 2004 OEM arrangement between Motorola and MeshNetworks—violated the terms of an April 2003 license agreement NexGen City and cash-strapped MeshNetworks, according to the lawsuit. Under that arrangement, MeshNetworks was prohibited from competing with NexGen City and from licensing its product to another OEM to develop handheld P2T devices—something NexGen City developed, the lawsuit states.

On Sept. 29, 2004, MeshNetworks sent a letter to terminate its obligations to NexGen City, which last year used the license agreement to build a high-speed wireless data network in Garland, Texas—the largest deployment of MeshNetworks’ technology at the time. The lawsuit claims the letter was sent to clear the way for MeshNetworks to merge with Motorola.

“The license agreement was an obvious obstacle to any transaction between Mesh and Motorola, because Motorola is an OEM of public-safety devices and networking solutions,” the lawsuit states. “Clearly, Mesh was precluded by virtue of obligations to [NexGen City] from doing business with any other OEM, including Motorola.”

With the merger, Motorola and MeshNetworks have “conspired to monopolize” the industry, the lawsuit claims. In addition, NexGen City’s customer relationships and ability to access capital markets allegedly have been damaged.

“In short, [NexGen City’s] very existence has been put into question,” the lawsuit states.

With this in mind, NexGen’s lawsuit asks the court to order Motorola to divest MeshNetworks.

Meanwhile, Motorola denied the antitrust- and conspiracy-focused allegations.

“Motorola has reviewed the complaint, and we deny its allegations,” Motorola spokesman Jeff Madsen said, noting that the U.S. Department of Justice reviewed the MeshNetworks deal before it closed in December.

Motorola declines further comment on the litigation at this time, Madsen said.