Antitrust Law Daily Wrap Up, ADVERTISING—S.D. Ohio: Sprint obtains $5M judgment against trafficking scheme operators, (Oct 31, 2014)

By Greg Hammond, J.D.

The federal district court in Columbus has entered a stipulated final judgment and permanent injunction against the operators of the so-called "Bulk Handset Trafficking Scheme." Operators of the scheme will be required to pay a $5 million judgment and are permanently enjoined from engaging in such activity in the future (Sprint Solutions, Inc. v. Shoukry, October 30, 2014, Sargus, E.).

Sprint Solutions, Inc. filed suit against the operators, alleging that they engaged in an unlawful enterprise involving: (1) the unauthorized and deceptive bulk purchase and resale overseas of specially-manufactured wireless telephones designed for use on Sprint’s wireless service; (2) the theft of Sprint’s subsidy investment in the phones; (3) the unlawful access of Sprint’s protected computer systems and wireless network; (4) the trafficking of Sprint’s protected and confidential computer passwords; and (5) the willful infringement of Sprint’s trademarks. Sprint asserted claims for—in part—false advertising under the Lanham Act, among other claims.

The court concluded that the defendants’ conduct violated the Lanham Act for both false advertising and trademark infringement. Consequently, judgment was entered against the defendants in the amount of $5 million. Additionally, the defendants were permanently prohibited from: (1) purchasing, selling, unlocking, reflashing, altering, advertising, soliciting, and/or shipping any Sprint phones; (2) supplying Sprint phones, or facilitating or assisting in the purchase, hacking, altering, erasing, tampering with, deleting, or otherwise disabling the software installed in Sprint phones; and (3) engaging in any conduct described in the complaint as the "Bulk Handset Trafficking Scheme."

The case number is 2:14-cv-00127-EAS-EPD.

Attorneys: Gail E. Podolsky (Carlton Fields Jorden Burt, PA) for Sprint Solutions, Inc., Sprint Communications Co. LP, and Boost Worldwide, Inc. Omar Tarazi (Law offices of Omar Tarazi) for Tamer Shoukry, and American Cellular Refurbishing Co.

Companies: Sprint Solutions, Inc.; Sprint Communications Co. LP; Boost Worldwide, Inc.; American Cellular Refurbishing Co.

Cases: Advertising OhioNews