A jury has ordered Boeing Co.’s satellite division to pay at least $370 million for breaching a contract to build and launch satellites for a communications company headed by cellular phone pioneer Craig McCaw. The decision came after a four-week trial in which ICO Global Communications Holdings Ltd. accused the aerospace giant of trying to hurt its proposed satellite network by fraudulently raising prices for the project. The jury ordered the satellite subsidiary to pay $370.6 million to ICO, while the parent company was ordered to pay $91.6 million. The initial award didn’t include punitive damages. Boeing will appeal the verdict.

The lawsuit, filed in 2004 in Los Angeles County Superior Court, stems from ICO’s decade-old plan to launch a fleet of satellites that would provide mobile telephone and Internet service. ICO, based in Reston, VA, contracted with El Segundo-based Hughes Electronics Corp. in the mid-1990s to build and launch 12 satellites. Boeing acquired Hughes in 2000 and inherited the contract with ICO, but only two satellites were finished – one of which was lost due to a failure aboard a Boeing Sea Launch rocket the same year.

ICO sued Boeing and its satellite division four years later for breach of contract after Boeing allegedly demanded ICO pay another $400 million to finish the job. Costs of producing the satellitesincreased as ICO tried to delay the project during a major slump in the telecommunications sector. ICO sought unspecified punitive damages and around $1.5 billion in actual damages, plus interest. ICO contended that once Boeing got into the satellite communications business, its former customer became a competitor. Boeing claimed it attempted to keep the deal alive and accused ICO of canceling the contract for convenience. The jury found that ICO was the good guy in this business-related battle.

Source: Associated Press