James Baldinger, Jennifer Yasko, Aaron Weiss and Steven Blickensderfer, Carlton Fields. Courtesy photosHacks and Exports Targeting TracFone Lead to Big US Award Against Traffickers
An extensive investigation in the United Arab Emirates uncovers large-scale U.S. wireless phone traffickers, who lost in litigation.
December 09, 2019 at 06:00 AM
3 minute read
INTELLECTUAL PROPERTY
James Baldinger, Jennifer Yasko, Aaron Weiss and Steven Blickensderfer
Carlton Fields
TracFone Wireless Inc. is the nation's largest prepaid wireless phone company, but its business model was under attack. The concept was to sell specially manufactured phones at discounts and recoup the money on the sale of wireless airtime.
But TracFone realized traffickers were buying and unlocking three-quarters of its phones, cutting out the company by hacking its proprietary software and reselling the devices for a profit overseas.
The company retained Carlton Fields to go on the offensive 15 years ago to stamp out new trafficking outbreaks when they discover them. And they keep turning up new ones.
Describe a key piece of testimony, evidence, ruling or order in the case and your view of how it influenced the outcome.
We filed TracFone Wireless v. Nektova Group et al. after an extensive investigation conducted in the United Arab Emirates and throughout the United States. TracFone led the endeavor as part of its aggressive efforts to pursue traffickers and shut them down to protect its customers and the company. I accompanied TracFone's legal and fraud experts to Dubai to visit handset trafficking warehouses and meet with illicit dealers. The trip was a game-changer. We gleaned information about previously unidentified traffickers in the United States, including the defendants named in the Nektova matter.
The complaint we filed in January 2019 details overwhelming evidence of the defendants' misconduct, including a sworn affidavit from a Dubai businessman who told us the defendants sold him more than 10,000 new TracFone-branded iPhones in a three-month period in 2018. He is not an authorized reseller of TracFone products and understood the phones he purchased were obtained by "runners" who buy up TracFone devices from big-box stores to resell them unlawfully.
The case easily survived a motion to dismiss in April because Carlton Fields has established precedential case law recognizing the viability of handset trafficking claims on behalf of our clients in jurisdictions across the country over the past 15 years.
In September, the court entered a $10 million judgment and a permanent injunction against the defendants. TracFone has filed multiple cases based on our Dubai investigation this year and intends to file more as it works to eradicate illicit trafficking of its handsets.
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