Law Street Media

AT&T, Cricket Wireless Sue for Alleged Prepaid Phone Trafficking Scheme

The scales of justice surrounded by an array of smartphones.

On Monday in the Southern District of Florida, plaintiffs Cricket Wireless LLC, AT&T Mobility LLC and AT&T Intellectual Property II, L.P., filed a complaint against defendants Noel Brown, NoelTheTechExperts, LLC, and unknown individuals for allegedly engaging in a “PrePaid Phone Trafficking Conspiracy.”

The complaint explained that AT&T PREPAID, formerly known as AT&T GoPhone, “sells new prepaid wireless phones and other mobile devices under the AT&T brand,” Cricket Wireless does the same under its brand. These devices are to be used with an AT&T or Cricket Wireless SIM card. The phones “are sold at prices lower than the wholesale price of the Phones as sold to AT&T to make them more widely accessible to consumers. The Phones are physically branded with AT&T’s registered trademarks and are preloaded with AT&T proprietary software. AT&T sells its Phones directly from the AT&T PREPAID and Cricket Wireless websites, from retail stores owned by AT&T, through authorized AT&T and Cricket dealers, and through AT&T approved national retail chains such as Best Buy, Walmart, or Target.”

According to the complaint, the defendants “are perpetrators of an unlawful conspiracy to profit from the illegal acquisition, unlocking and resale of new bulk AT&T Phones by misappropriating the substantial financial investment that AT&T makes in its Phones…Defendants profit directly by providing unlocking services and unlock codes to their co-conspirators for a fee.”

The plaintiffs averred that the purported “Prepaid Phone Trafficking Conspiracy” consists of the defendants’ co-conspirators acquiring new locked AT&T phones from AT&T or authorized dealers that are ineligible to be unlocked. The defendants and co-conspirators allegedly obtain these Phones “under false or fraudulent pretenses that they will be utilizing the phones on the AT&T Authorized Networks, but then unlock and resell or divert them to other markets,” ultimately to a party that the plaintiffs do not have a relationship with.

Specifically, the plaintiffs claimed that “[t]hese Phones are not activated in an authorized manner on an AT&T Authorized Network. Instead, Defendants provide their co-conspirators with services in either illicitly circumventing, or causing to circumvent, a technological protection measure, or by providing co-conspirators with an unlock code specific for each individual new AT&T Phone for permanently unlocking the phone without authorization. Once the new Phones are unlocked, they can operate on other carriers’ wireless networks … Defendants’ co-conspirators then offer for sale AT&T Phones that they represent to be new.” Consequently, AT&T alleged that the defendants’ conspiracy “takes advantage of AT&T’s investment in its Phones to reduce the costs for its consumers” and that these Phones are allegedly materially different than legitimate AT&T Phones because “they are unlocked, and/or sold without warranty information, original packaging and accessories.” As a result of this alleged conduct, AT&T asserted that it has been harmed through pecuniary loss, lost sales and market expenses, lost consumer revenue and harmed AT&T’s relationships, image, and reputation, as well as allegedly causing other harm.

In the 12-count complaint, some of the counts against the defendants include contributory trademark infringement, common law fraud, and fraudulent misrepresentation, trafficking in computer passwords, unauthorized access with intent to defraud, obtaining information from a protected computer, circumvention of a proprietary software system, and trafficking in circumvention technology, along with other violations including those from the Computer Fraud and Abuse Act.

AT&T and Cricket Wireless have sought declaratory judgment in its favor, a permanent injunction, an award for damages, an award for costs and fees, for the defendants to deliver the plaintiffs their allegedly infringing inventory of phones and products with AT&T’s marks, and other relief. The plaintiffs are represented by Gunster, Yoakley & Stewart, P.A. and Kilpatrick Townsend & Stockton LLP.

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