Opinion ID: 200597
Heading Depth: 2
Heading Rank: 1

Heading: Generation of Settlement Agreement

Text: 2 The history of the parties' litigation is complicated by several corporate transmutations. In April 1996, appellees Cellexis and Freedom Wireless, Inc., sued GTE in the United States District Court for the District of Arizona, claiming that GTE stole its trade secrets by using Cellexis's technology for prepaid cellular telephone service (the 1996 litigation). 3 Five weeks after filing suit, Cellexis settled with GTE (the Settlement Agreement). As part of the Settlement Agreement, Cellexis agreed to pay part of GTE's attorneys' fees and to publicly retract prior statements accusing GTE of uncompetitive behavior, theft, fraud, and malice. In return, GTE agreed to drop its claims against Cellexis for malicious prosecution, trade libel, and interference with contractual relations. The Settlement Agreement contained a covenant by Cellexis and its principals not to sue GTE and its affiliates, partnerships, joint ventures, and successors in the future over GTE's use of the same technology. When the Settlement Agreement was signed, Cellexis had a patent application pending with the U.S. Patent and Trademark Office (Patent Office) for the technology at issue in the suit. 4 In September 1997, Cellexis sold its rights under the patent application to Freedom Wireless, Inc., (Freedom) for $750,000. In February 1998, the Patent Office issued the first of two patents ('067 patent) arising from the patent application, which Cellexis assigned to Freedom under the terms of the 1997 sale of rights. Four months later, in June 1998, Freedom sent a letter to GTE claiming that GTE was infringing the '067 patent. GTE responded that the Settlement Agreement barred any suit against GTE or its affiliates because the patent covered the technology at issue in the 1996 litigation. 5 On July 27, 1998, GTE Corporation and Bell Atlantic Corporation (Bell Atlantic) entered into a merger agreement. On September 21, 1999, Bell Atlantic and Vodafone Airtouch PLC agreed to consolidate their operations. As part of the agreement, GTE Wireless's operations were assigned to Cellco (a Bell Atlantic subsidiary) at the closing of the GTE/Bell Atlantic merger. GTE Mobilnet was dissolved on June 21, 2000, and all its assets were distributed to its sole shareholder, GTE Wireless. The GTE/Bell Atlantic merger was completed July 10, 2000, and GTE Corporation became a wholly-owned subsidiary of Bell Atlantic (now Verizon Communications, Inc. (Verizon)). GTE subsidiaries and affiliates together own 55% of Cellco. Verizon also has the contractual right to appoint a majority of Cellco's Board of Representatives.