May 22 (Bloomberg) -- Viacom Inc.’s MTV Networks filed an $11.6 million lawsuit against a cell phone service designed for children, accusing it of using content without permission and failing to follow through on a ring-tone licensing deal.

Closely held Kajeet Inc., based in Bethesda, Maryland, signed a $2.5 million licensing deal in 2006 and agreed to buy $11.7 million worth of advertising on MTV channels, according to a complaint filed today in federal court in Manhattan.

Kajeet stopped making payments on the contract and signed a competing deal with Time Warner Inc.’s Cartoon Network, MTV said in the complaint. The MTV contract included music, wireless games and text-message content associated with SpongeBob Squarepants, Jimmy Neutron, Hey Arnold and Rugrats -- characters owned by MTV affiliate Nickelodeon.

“Kajeet has breached and defaulted under the agreement by refusing to pay past due and outstanding invoices, indicating it ‘wants out’ of its agreement with MTVN while still using MTVN content past the expiration of its license,” the New York-based network said in its complaint.

On its Web site, Kajeet says its brightly colored pre-paid phones, made by LG Electronics Inc. and Samsung, are sold on its own site and through retailers including Amazon.com Inc. and Best Buy Stores Inc. The service is specialized for children age seven through 17 and gives parents some control over the phones, Kajeet says.

Carol Politi, a Kajeet spokeswoman, didn’t immediately respond to an e-mail seeking comment.

The case is MTV Networks v. Kajeet Inc., 09-cv-04806, U.S. District Court, Southern District of New York (Manhattan).

To contact the reporter on this story: Erik Larson in New York at elarson4@bloomberg.net.

Last Updated: May 22, 2009 13:58 EDT