CopyTele Targets AT&T's Encrypted Phones in Patent Suit

AT&T Inc.’s encrypted mobile phones designed for government agencies, financial companies and international businesses is accused of infringing the patent of a New York company that had supplied devices to the military.

CopyTele Inc. said its Encrypted Cellular Communications unit developed the technology for use by the military during the two U.S.-led Gulf wars. The lawsuit, filed today in federal court in AT&T’s hometown of Dallas, seeks cash compensation and an order blocking further use of the invention until the patent expires in 2019.

Companies including AT&T, Boeing Co. and Silent Circle LLC have been working to develop services that meet the burgeoning demand for more secure telephones amid reports of hacking and government spying. Corporations are worried about competitors learning details of sensitive business negotiation; government officials don’t want eavesdroppers learning of military plans; and consumers want private communications protected.

AT&T’s service uses a chip inserted into the telephone so that, when the user calls another person with the chip, the communications are secure. It charges an activation fee of $115 per device and monthly charges of $40, in addition to regular data and wireless fees, according to a CopyTele statement.

Rob Berman, chief executive officer of Melville, New York-based CopyTele, said in the statement that, with more than 300 million wireless subscriptions in the U.S., the goal of using the encryption technology to generate revenue “has enormous potential.”

Licensing Campaign

Security has become a bigger concern for companies amid leaked reports from government whistle-blower Edward Snowden about spying on e-mails and telephone calls by the U.S. National Security Agency.

Closely held Silent Circle developed a phone that encrypts records of calls, text messages or data storage in order to prevent spies to obtain and mining the information. Boeing has a phone that will deactivate if someone tries to tamper with the device.

In addition to patents it has developed on its own, CopyTele buys patents and last year began a campaign of licensing and litigation to get money from companies including Microsoft Corp., airlines and Citrix Systems Inc.

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