Upaid case could be settled out of court

Written by Rachana Khanzode | BV Mahalakshmi | Mumbai, Hyderabad | Updated: Apr 27 2009, 05:57am hrs
UK-based online and mobile payments solutions company Upaid Systems, which had filed an over-$1-billion fraud and forgery case against Satyam, has been approached for an out-of-court settlement.

Internal sources confirmed that talks between Satyams new owner Tech Mahindra and Upaid have been initiated. There is a possibility of out-of-court settlement as Tech Mahindra has approached Upaid for the same, the source added. During the trial, certain substantial facts are expected to come out which will impact the entire industry. So, there is high possibility the case might not go for the trial which is about 40 days from now.

Venturbay Consultants, a 100% subsidiary of Tech Mahindra, bought 31% of Satyam for Rs 1,756 crore and has come out with an open offer for another 20% stake in the company.

Upaid officials refused to comment. However, in an interaction with FE in March, Upaid CEO Simon Joyce had said the company was open to this option provided a serious player approaches it. Tech Mahindra did not respond to an email query.

Upaid had filed a lawsuit in a Texas court in 2007 alleging that Satyam provided forged documents to it in a patents filing that eventually resulted in the company losing its patent infringement case against telecom giants Qualcomm and Verizon. Upaid claims the fiasco cost it as much as $1 billion in lost business opportunity. The next hearing in the case is scheduled for June 1.

Sources in Satyam confirmed that Tech Mahindras legal consultants are working towards an out-of-court settlement. According to initial estimates, Upaid may get 5-12% of the total compensation charges, the sources said, adding this was usually a norm for any out-of-court settlements filed in US courts.

Earlier, when contacted, Tech Mahindra and the government-appointed board of Satyam had refused to divulge any information saying the matter was sub-judice.

Industry experts also say going by Satyams financial health, Tech Mahindra may not find it viable to continue with the case. According to Vijay Mukhi, consultant, technology partner with DSK Legal, In case they are looking for an out of court settlement, it indicates the company is not so sure of winning this case. Also, the fact that the case has been running so far indicates that the court is not in favour of Satyam.

Moreover $1 billion is a legitimate amount when it comes to IP-related issues in the global scenario. So, we dont expect the out-of-court settlement to be less than $100 million, he added.