$250 Million Demand for Taxicab Tech

(CN) - A tech company that created and installed a system for taxi riders to pay in the cab with credit cards claims in court that VeriFone Media fka Clear Channel Taxi Media owes it $250 million.

Creative Mobile Technologies sued VeriFone Systems and VeriFone Media Solutions fka Clear Channel Taxi Media, in New York County Supreme Court.

Creative claims VeriFone cut it out of a lucrative contract involving "passenger information monitors" that have been installed in 6,600 cabs in New York City, and in cabs in 60 other cities nationwide.

In March 2004, the New York City Taxi and Limousine Commission required all taxicabs to accept debit and credit cards for payment, to display fare information and provide other information to passengers on monitors by November 2005.

A group of taxicab industry leaders formed Creative Mobile Technologies (CMT), a Queens-based company, in 2005, to provide in-taxi technology to charge credit cards, display information, and run advertisements.

"Plaintiff CMT was founded in 2005 in response to New York City's mandate that taxicabs install so-called passenger information monitors ('Pims')," the complaint states. "As envisioned by the city, the Pims were intended, among other things, to allow passengers for the first time to pay for fares using a credit card and, generally, to improve the passenger experience in New York City taxicabs. As detailed further below, CMT was successful in developing in-taxi media systems that are now installed in over 6,600 taxicabs in New York City, as well as in taxicabs in 60 other cities in 30 states."

Recognizing that money could be made from in-taxi advertising, CMT began working with a Canadian taxi technology and dispatch company to develop monitors that would meet the city's requirements and run in-taxi ads, according to the complaint.

In March 2006, Creative Mobile Technologies signed an agreement with Clear Channel Taxi Media to run Clear Channel's ads on CMT's in-taxi monitors, in exchange for a monthly fee and a share of revenue.

Clear Channel Taxi Media, at the time a subsidiary of Clear Channel Outdoor, provided outdoor advertising, including ads on the top of taxicabs in New York City.

"CMT realized that the installation of Pims presented the opportunity for advertisements to be run inside New York City taxicabs themselves - something that had not been done before," the complaint states. "CMT believed that the opportunity to sell advertising space on installed Pims could help defray the costs of installing and operating the Pims and, over time, could be profitable for the company that installed the Pims.

"CMT viewed its relationship with Clear Channel Outdoor and CCTM as one in which all parties would act in the others' best interests in developing a profitable in-taxi advertising platform - something that did not exist at that time. Notably, CCTM previously had failed in its efforts to develop a similar in-taxi advertising platform in Las Vegas. This time around, CCTM ensured that any risk of failure of the technology medium would be borne by CMT alone: CCTM would only have to pay for advertising on installed and fully functional screens, and would not be required to make the significant capital contribution required to develop the technology."

CMT agreed to develop and install up to 5,000 monitors in New York City taxicabs and to run only Clear Channel ads on in-taxi screens, in exchange for a monthly minimum amount for each screen. Clear Channel agreed to share ad revenue in excess of twice the monthly minimum equally with CMT, and to split all revenue generated by its ads on non-CMT screens in New York City, according to the complaint.

The agreement also required both parties to offer the other the first opportunity to partner in developing in-taxi advertising outside of New York City.

Creative Mobile Technologies claims Clear Channel complied with the agreement for nearly 4 years, until Clear Channel Outdoor sold the company to VeriFone in December 2009.

"Unlike Clear Channel Outdoor, which did not, and had no intention of, competing with CMT, VeriFone was, and is, CMT's primary competitor for in-taxi technology in New York City taxicabs and taxicabs elsewhere in the United States," the complaint states. "VeriFone operates this business through its wholly owned subsidiary VeriFone Transportation Systems, Inc. ('VTS')."

Based in San Jose, VeriFone designs and produces point-of-sale equipment and payment systems for various industries.

CMT and VeriFone, two of the four vendors approved by New York City for in-taxi technology, dominated the taxicab monitor market from the beginning, according to the complaint. By 2010, CMT and VeriFone were the only two operators of monitors in New York taxicabs.

After VeriFone took over, it refused to supply Creative Mobile Technologies with data needed to calculate the amounts due under the agreement, ran ads on non-CMT screens without sharing revenue with CMT, and used similar technology outside of New York City without first offering CMT the opportunity to participate, the company claims.

Creative Mobile Technologies seeks an accounting and more than $250 million for breach of contract and tortious interference with contract.

It is represented by John Gardiner with Skadden, Arps, Slate, Meagher & Flom.

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