Legal Featured Article
December 19, 2012
Creative Mobile Technologies Files Lawsuit against VeriFone Systems, VeriFone Media
By Jayashree Adkoli, TMCnet Contributor
Creative Mobile Technologies, LLC (CMT), a provider of in-taxi media, advertising and payment technology, has filed a lawsuit against VeriFone Systems, Inc. and VeriFone Media, LLC (VMS), related to contractual breaches of its in-taxi technology agreement.
Seeking damages in excess of $250 million, CMT has charged the defendants with "wrongful, malicious, tortious and contractual breaches" of the company’s agreement with its exclusive in-taxi advertising partner, VMS, formerly Clear Channel (News - Alert) Taxi Media, LLC (CCTM).
In 2005, when CMT conceptualized new technologies that comply with New York City's taxi service enhancement needs, CCTM was its sales partner. Both companies had entered into an exclusive Sales Representation Agreement starting in March 2006.
Under the terms of the agreement, CMT took financial responsibility of the development, acquisition and installation of all the in-vehicle technology, as well as the entire payment processing and content delivery infrastructure, while CCTM agreed to run the advertising program on CMT's in-taxi screens as the exclusive seller in New York City taxis.
According to sources, CCTM afforded CMT the right of first refusal for the launch of similar technology in markets outside New York City. In addition, the revenue-sharing violations by CCTM are substantial and ongoing, as both companies had agreed upon revenue sharing, should CCTM advertise on non-CMT in-taxi media screens in New York City.
Apart from seeking damages, the suit by CMT also seeks review of damages arising out of VMS's failure to pay CMT in violation of its revenue-sharing obligations under their agreement, and for VMS's blatant disregard of CMT's first refusal rights.
In summary and as required under the agreement:
The lawsuit was reportedly filed in the New York State Supreme Court in Manhattan by CMT's attorneys: Skadden, Arps, Slate, Meagher & Flom LLP and co-counsel Rosenberg, Calica & Birney LLP.
John L. Gardiner, partner at Skadden and co-head of the firm's international litigation and arbitration group, said in a statement, "As alleged in the complaint, while our client fully and faithfully performed its obligations under the agreement with VMS, even after VMS was acquired by VeriFone, VeriFone intentionally and maliciously caused its subsidiary VMS to violate its contractual obligations to CMT, causing severe damage to CMT, damage that CMT believes to be in excess of a quarter of a billion dollars. CMT intends to pursue its legal rights under the agreement with VMS."
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Edited by Braden Becker
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