Ericsson loses ruling in Airvana trade secrets case

The exterior of Ericsson's headquarters are seen in Stockholm April 30, 2009.

NEW YORK (Reuters) - Airvana Network Solutions Inc, a Massachusetts broadband network company, has won a preliminary injunction against Ericsson (ERICb.ST) in a trade-secrets lawsuit that seeks more than $330 million from the Swedish telecommunications network equipment maker.

State Supreme Court Justice Barbara Kapnick in Manhattan ruled that Airvana had shown it was likely to succeed on the merits of its lawsuit and would suffer irreparable harm if the injunction were not granted.

Under the injunction, which was issued on Tuesday, Ericsson cannot use certain hardware unless it employs software developed by Airvana.

Airvana filed the lawsuit last year, claiming Ericsson stole its trade secrets and attempted to drive it out of business.

Kathy Egan, an Ericsson spokeswoman, said the company is "in the process of reviewing the court's decision" but that it generally does not comment on pending litigation.

The lawsuit alleged that Ericsson secretly worked with a Korean partner to create "knock-off" hardware based on technology developed by Airvana that could then be sold to wireless carriers Verizon Wireless and Sprint Nextel Corp (S.N). Verizon Wireless is a joint venture of Verizon Communications Inc (VZ.N) and Vodafone Group Plc (VOD.L).

Airvana, founded in 2000 by former Motorola Inc executives, accused Ericsson of attempting to replace Airvana's design with a so-called "in-house" product that is actually based on Airvana's work.

Ericsson had argued in court that it had modified Airvana's designs to the point where the new hardware was no longer "based on" Airvana's design, according to the judge's decision.

But Kapnick disagreed, concluding that the hardware in question was based on Airvana's work.

Peter MacDonald, a lawyer for Airvana, said the company was "gratified" by the ruling, which he said recognized that Ericsson had violated its contractual obligations.

Airvana's chief executive said last year that the $330 million it is seeking in damages is based on years of discounts that the company had given Ericsson.

The case is Airvana Network Solutions Inc v. Ericsson Inc et al, New York State Supreme Court, New York County, No. 650360/2012. (Reporting by Joseph Ax; Editing by Gerald E. McCormick, Bernard Orr)