Sprint to Recover $5M for Resold Cellphones

     TAMPA, Fla. (CN) – Sprint may recover $5 million from cellphone resellers that allegedly trafficked the company’s phones and infringed its trademarks, a federal judge ruled last week.
     Sprint Solutions and Sprint Communications Co. sued The Cell XChange, World Wide Sales and other Florida-based affiliates, alleging trademark infringement, unfair competition and unauthorized use of its cell phones and wireless network.
     The defendants made bulk purchases of phones designed for the Sprint network, including Sprint iPhones, and resold them overseas, trafficked Sprint’s protected computer passwords and accessed Sprint’s network without authorization, according to the 2014 federal lawsuit.
     The Cell XChange and co-conspirators bought phones Sprint subsidized for the benefit of U.S. consumers, unlocked them for use on other networks and resold them to consumers in countries where wireless service providers do not subsidize phones, under the Sprint trademarks. In addition to causing Sprint to lose sales, revenues and subsidy investments, the defendants also damaged Sprint’s relationship with its customers, dealers and retailers, as well as the wireless provider’s brand and reputation, the complaint said.
     After Sprint discovered in 2012 that the defendants were selling new Sprint phones on eBay, it launched an investigation that revealed the extent of the “bulk handset trafficking scheme,” which involved at least three companies and six individuals in Florida. The Cell XChange and affiliates continued their trafficking activities despite receiving a cease and desist letter from Sprint in June 2012, Sprint claimed in the lawsuit.
     U. S. District Judge James Whittemore agreed that the defendants’ alleged trafficking scheme amounted to trademark infringement and false advertising and that Sprint had suffered damages, including loss of goodwill and harm to its reputation, as a result of the alleged activities.
     The court enjoined Tampa-based The Cell XChange from buying, unlocking or reselling Sprint’s phones and from advertising or reselling Sprint services.
     Moreover, The Cell XChange and affiliates may not access Sprint’s computer networks or use Sprint’s trademarks to advertise any products or services, according to the 7-page judgment.

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