Inflight connectivity company Gogo Business Aviation spent $5m in legal expenses over a trademarking dispute with rival SmartSky.
In April 2020, Gogo submitted a petition to the US Patent and Trademark Office, claiming that SmartSky’s patent for its connectivity service was not valid. SmartSky said its connectivity is unique and more secure than other providers’ service due to each aircraft being assigned a unique connection to the network, rather than sharing the same connection with multiple aircraft across a broad area. SmartSky successfully defended its trademark in court in September 2020, and in February it filed a patent infringement lawsuit against Gogo.
Gogo reported that there was an “aggregate $5m of additional interest expense and legal expenses tied to the SmartSky litigation” in its most recent accounts for the quarter ending June 30th 2022.
The connectivity provider had previously planned to have free cash flow of $125m by the second quarter (Q2) of this year. But litigation expenses, alongside $10m of operating expenses tied to its Global Broadband initiative, were not included in the target. Gogo said it is still aiming to reach free cash flow of more than $200m by 2025.
Aside from the legal expenses, Gogo recorded a record revenue of $97.8m, up 19% compared with the second quarter of 2021, due to strong growth in both service and equipment revenue. Its net income increased to $22m compared with a net loss of $66.4m in Q2 last year, and its cash and cash equivalents totaled $164m versus $152.8m last quarter.
“The strength of the business aviation market combined with solid execution drove record performance in the quarter, positioning us well for continuing revenue and free cash flow growth,” said Barry Rowan, executive vie president and chief financial officer, Gogo. The company is raising its end-of-year financial goals “in spite of $9m in strategic investments and litigation expenses”, he said.
In September 2020, when Gogo lost its litigation case, Sergio Aguirre, president, Gogo said: “Gogo reiterates our strong belief that we are not infringing any valid patent held by SmartSky.” He added that the decision does not impair Gogo’s “ability to successfully expand, to launch Gogo 5G or to enhance Gogo’s position in the business aviation market”. The new patent case launched by SmartSky against Gogo is ongoing, with Gogo currently attempting to dismiss the case. In April, SmartSky petitioned for extra time to respond to Gogo’s request for dismissal.
Earlier this week, SmartSky received a supplemental type certificate for its hardware on the Cessna Citation X-series business aircraft.
