Here is an update on a joint venture I wrote about earlier this month for the Daily Report. …

The ink was barely dry on this deal when the lawsuits started flying.

King & Spalding client Sprint Nextel Corp. announced on May 7 that it had formed a $14.5 billion joint venture with Clearwire Corp. to combine their wireless broadband businesses. More than two dozen King & Spalding lawyers in Atlanta and New York worked on the deal, led by Atlanta partner Michael J. Egan III. [Daily Report story, May 8, 2008].

The same day, Sprint Nextel also filed a complaint for declaratory judgement in the Delaware Court of Chancery seeking a ruling that the Clearwire joint venture did not violate any of its existing agreements with iPCS Inc., an Illinois-based wireless affiliate of Sprint. Five days later, iPCS sued Sprint Nextel in Cook County, Ill. Circuit Court, seeking a permanent injunction against Sprint Nextel to block its formation of the joint venture.

IPCS argues in the Cook County case that it signed agreements in 1999 giving it exclusive rights to market Sprint products in its territory. The Sprint-Clearwire joint venture, which will deploy a nationwide mobile WiMAX network, violates iPCS’s 1999 exclusivity agreements with Sprint, iPCS said.

Sprint Nextel argued in the Delaware case that it “has the right to operate wireless networks outside the 1.9 GHz spectrum range in” iPCS’s service area. The Sprint Nextel-Clearwire WiMAX joint venture will operate on the 2.5 GHz spectrum range, according to the complaint. To support its position, Sprint Nextel cited a 2006 Delaware Chancery Court ruling, Horizon Personal Communications v. Sprint Corp., C.A. No. 1518-N.

Four Atlanta-based King & Spalding lawyers are working as of counsel to Sprint Nextel on the Delaware litigation: partner Daniel J. King [see photo, right], senior attorney Amy Yervanian, and associates Michael J. Cates and Shelby S. Guilbert Jr. Morris, Nichols, Arsht & Tunnell in Wilmington, Del. is lead counsel to Sprint Nextel on that matter. Mayer Brown partners John M. Touhy and Michael K. Forde in Chicago are is representing iPCS. Touhy and Forde have advised iPCS on previous claims by iPCS that Sprint Nextel has breached management agreements with the company.

OK, deal lawyers, here is your chance to weigh in. Knowing that the WiMAX joint venture would likely be litigated by iPCS, would you have advised Sprint Nextel to go ahead pursue this deal with Clearwire anyway? Click on the "Add a Comment" link below and fire away.