Panasonic Avionics to seek dismissal of CoKinetic lawsuit

Panasonic Avionics plans to seek immediate dismissal of a lawsuit filed by software company CoKinetic Systems, which claims PAC employed unlawful means to monopolize the market for IFE software and media services on the IFE hardware it supplied to airlines.

The Lake Forest, California-based unit of Panasonic Corp, which holds a roughly 70% share of the embedded IFE hardware market, in a statement says it “vigorously disputes the allegations made” in CoKinetic’s lawsuit.

“The allegations are without merit and Panasonic Avionics intends to contest the suit. This lawsuit involves a dispute around the commercial terms of a long-standing business relationship between CoKinetic and Panasonic Avionics.”

CoKinetic is perhaps best known for supplying its AirPlay software to Virgin America’s ‘Red’ IFE system and Emirates’ ‘ice’ system, the hardware for which was supplied by Panasonic Avionics. The firm’s suit, filed in the US District Court for the Southern District of New York, alleges that Panasonic Avionics willfully violated open source licensing requirements, breached contractual obligations to CoKinetic, abused FAA regulatory processes, conducted corporate espionage, and defamed CoKinetic and sabotaged its products.

One of the most explosive allegations in the CoKinetic suit is that Panasonic Avionics “deliberately” degraded and damaged IFE hardware systems owned by its own airline customers, including Emirates, Delta Air Lines, Virgin America, United Airlines and others “in order to create the appearance that only Panasonic is able to provide reliable software and media services on Panasonic IFE hardware”.

In its statement, CoKinetic also cites purported “paid commercial bribes” by Panasonic Avionics, which is currently under investigation by the US DOJ and SEC for alleged violations of the Foreign Corrupt Practices Act. CoKinetic is seeking damages in excess of $100 million.

Panasonic says the timing of this suit “is suspicious”, noting that “as recently as October 2016, CoKinetic issued a press release praising its 10-year relationship with Panasonic Avionics. If, as the suit alleges, Panasonic Avionics has engaged in a ‘decades-long’ effort to damage CoKinetic’s business, why did the company make such a public statement?

“It is important to note that CoKinetic’s counsel in this action, Todd Higgins, is also a former CoKinetic executive himself, which suggests a personal motive for bringing this lawsuit. Panasonic Avionics will seek the immediate dismissal of the suit.”

Separately, Panasonic Corp on 2 February revealed in a stock exchange filing that the DOJ and SEC are probing PAC’s sales activities, and said it had begun talks with authorities to try to resolve the matter. However, Panasonic Corp didn’t confirm whether the latest probe was related to the US government’s initial bribery investigation into PAC’s foreign sales activities, which the Wall Street Journal reported on in March 2013. PAC’s CEO and CFO departed the company last month.

Investigations for alleged violations of the Foreign Corrupt Practices Act are fairly common these days. Firms are beholden to act responsibly, but the activities of employees and third parties are not always in alignment.

Runway Girl Network has sought comment concerning rumored alleged dealings between Panasonic Avionics’ UK office and Dubai, and asked if any checks and balances are being enacted to avoid further problems in the future. “We will not have any comment until the investigation is complete,” says a Panasonic spokesman.

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