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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:

  • VeriFone violated CMT’s terms and conditions by employing a combination of bad faith dealing and other tactics that caused VMS to breach the agreement in numerous ways
  • VMS withheld financial information from CMT
  • VMS delayed payments to CMT for certain advertising, as well as refused to pay CMT for other advertising
  • Violated the agreement's broad rights of first refusal by installing similar technology and placing advertisements in taxis outside of New York City without first offering those opportunities to CMT

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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