Eleven years ago, we posted The Risks Of WiFi Deployment In Prisons outlining the security risks and operational challenges of deploying WiFi in prisons to support the connectivity needs of inmate devices. It was written in response to Global Tel*Link (now ViaPath) first announcing it would be offering inmate tablets.

After laying out detailed security and operational hurdles of inmate WiFi access, we concluded, “It is clear that achieving adequate WiFi signal coverage and application data throughput at a reasonable cost of installation is a challenge in this unique environment. Ongoing equipment maintenance expense as well as repair cost due to vandalism must also be considered when looking at the total cost of this approach.

In contrast, as evidenced by the high number of contraband devices and continued use of smuggled cell phones in jails and prisons globally, cellular signal strength and coverage is typically more than adequate, with no onsite equipment required.

Additionally, 4G LTE (and soon 5G) cellular may be much faster than a WiFi network with an undersized or overburdened connection to the Internet (designed for coverage versus designed for capacity).”

With the recent launch of Securus Technologies’ new inmate tablets utilizing a nationwide cellular network, their press release confirms our 11 year old analysis and assertions regarding the operational inadequacy and security risks of deploying WiFi in prisons.

From the press release:

“Because of the complex implementation requirements in corrections settings, deploying tablet technology can take months, quarters, even years to fully implement, but the infrastructure with our new tablet technology allows for quicker and cost-effective deployment”

“Currently, tablets rely on a complex, on-site setup to connect to cloud-based services, which is costly and time-consuming. EVOTAB and Officer T80 tablets directly connect to a cloud platform using a secure cellular network, which is faster, more secure, and less hardware intensive.”

Better late than never I suppose…

The post Securus Gets the Signal, Eleven Years Later appeared first on meshDETECT® Blog.

Consolidation within the prison payphone communications industry, also known as inmate communications services (ICS), continues with Global Tel*Link (GTL) asking the FCC for approval to buy (some? all?) of the assets of Legacy/Edovo.

GTL is the largest provider of ICS in the US. Legacy Inmate Communications is a wholly owned subsidiary of Jail Education Solutions, Inc. d/b/a Edovo (“Edovo”).

From the FCC filling, “On July 2, 2020, GTL, Legacy, and Edovo entered into a Master Transaction Agreement (“Agreement”) pursuant to which GTL will purchase certain assets and customers of Legacy, including certain customer accounts and receivables, certain customer agreements and contracts, certain vendor agreements and contracts, and certain equipment (the “Transaction”).”

Pursuant to the Transaction, Legacy will assign the following correctional facility contracts to GTL:

(1) Cook County, Illinois;

(2) Fresno County, California;

(3) Maine Department of Corrections;

(4) Bay County, Florida;

(5) Sonoma County, California;

(6) Kane County, Illinois;

(7) City of Santa Ana, California;

(8) Jackson County, Oregon;

(9) Mendocino County, California;

(10) Carroll County, Maryland;

(11) Yolo County, California;

(12) Dunn County, Wisconsin;

(13) Santa Clara County, California.

As a result of the Transaction, GTL will provide ICS to the Correctional Facility Customers pursuant to the terms of the above-referenced contracts, which are primarily county jail contracts.

Interestingly, the filing states, “Further, the proposed Transaction will not adversely affect competition because, after consummation of the Transaction, the total share of the interstate interexchange market of GTL will be less than ten percent (10%), and there are many other interexchange and international carriers operating on a nationwide basis, including other ICS providers. The Transaction will not provide Applicants with any competitive advantage as the result of concentration of fiber assets and will not harm consumers or negatively impact the market for facilities-based service. The proposed Transaction will not have a negative impact on the public interest, services to customers, or competition.”

With GTL and Securus Technologies controlling 80% if the total ICS market, we are not sure how this does not, in fact, continue the trend of adversely affecting competition in the ICS industry though the elimination of smaller competing vendors.

What this latest proposed acquisition shows is that the ICS industry is a duopoly and the current competition has neither the scale nor scope to compete. This market structure hinders true competition and thereby the economic and innovation benefits a robust marketplace would bring to inmates and their families.

The following image from a recent Prison Policy Initiative article highlights how these two firms have been allowed to capture this industry through acquisition.

The post Prison Payphone Industry Consolidation Continues appeared first on meshDETECT® Blog.

Epilogue: In December of 2017, Securus Technologies and Global Tel*Link  reached a confidential settlement to end their long-running infringement dispute over patents used in prison phone systems, according to a joint motion for dismissal filed in Texas federal court.

As detailed in depth below, the two rivals have for years engaged in litigation over their various patents, accusing each other of infringement and alleging that the other’s patents should be invalidated at the USPTO’s PTAB. Each side finally ended the patent war and agreed to voluntarily dismiss their claims in the latest and last iteration of the dispute. In 2016, Securus estimated that the companies had spent more than $40 million suing each other in this contentious IP battle.

Although Securus still has a sizable advantage in intellectual property, several PTAB decisions stripped Securus of key patents for call-monitoring technology. These rulings paved the way for GTL to file a massive infringement suit against Securus in 2017, seeking $115 million and an injunction against the use of technology integral to Securus. In December 2017, before trial, the companies reached a confidential settlement to end their litigation battle.

Update (7/20/17): A turning point in this long running patent battle? GTL has announced that the United States Court of Appeals for the Federal Circuit affirmed the decision of the Patent Trial and Appeal Board (PTAB) validating all claims of GTL patent 7,853,243, which protects GTL’s technology for biometric and voice validation of inmate calls – widely used features of inmate calling systems and a requirement in many U.S. county jails and state prisons. The Federal Circuit decision clears the way for GTL to request a Texas Federal judge to restart GTL’s pending $100M infringement lawsuit against Securus Technologies involving ‘243 and two other GTL patents, where GTL seeks past damages and an injunction to prevent Securus from using the technology on its platforms at all facilities where infringement is occurring.

GTL is asserting the following patents in its Texas suit against Securus:

United States Patent No. 7,853,243, “Telecommunications Call Management and Monitoring System” (filed Dec. 17, 2007; issued Dec. 14, 2010)

United States Patent No. 7,783,021, “Digital Telecommunications Call Management and Monitoring System” (filed Jan. 28, 2005; issued Aug. 24, 2010)

United States Patent No. 7,551,732, “Centralized Voice over IP Recording and Retrieval Method and Apparatus” (filed Dec. 7, 2004; issued Jun. 23, 2009)

Securus initiated the patent litigation between the companies in 2013, filing an infringement suit against GTL, followed by two more infringement suits, while seeking $115M from GTL to license Securus’ patents. After spending four years and admitting to spending at least $15M in legal fees, Securus has not collected a single dollar in damages. Securus has publicly and repeatedly implored GTL to mutually walk away from all patent cases at no cost to either party and urged “patent peace forever.”

Whether this proves to be the turning point in this patent war remains to be seen, but it will be interesting to see if the patent litigation battlefield instead widens to include the emerging and high growth prison wireless voice communications opportunity as well.

Update (3/22/17): In the latest salvo in what is now a four year patent battle, GTL has countersued Securus Technologies for infringing three GTL patents covering wireless services, voice messaging, and biometric capabilities. The suit seeks monetary damages and an injunction to prevent Securus’ continued use of the patented technology on its SCP Inmate Telephone system, used by 99.6 percent of all Securus customers, and Securus’ Offender Voice Mail System.

In the countersuit just filed, GTL asserted U.S. Patent Nos. 9,509,856; 8,515,031; and 9,521,250. In addition, GTL previously filed complaints in Texas federal court against Securus alleging infringement of four other GTL patents — U.S. Patent Nos. 7,783,021; 7,853,243; 7,551,732 and 7,256,816 — which also implicate the Securus SCP platform and cover services that include call management, voice authentication, VOIP calling, and scheduling video/audio communications for inmates. Securus attempted to invalidate each of these four patents at the Patent Trial and Appeal Board (PTAB) during the past two years, but failed to do so.

Update (6/6/16): Securus continues the patent war against GTL with two recent announcements. First, it has filed additional patent invalidation requests (a.k.a. Inter Partes Reviews or IPRs) with the Patent Trial and Appeal Board (PTAB) for the following GTL patents:

Patent No. 8,630,726 – “System and Method for Detecting Three-way Call Circumvention Attempts” and Patent No. 7,403,766 – “Telecommunication Call Management and Monitoring System with Voiceprint Verification”

Second, it has filed an additional four patents in a new patent infringement lawsuit against Global Tel Link:

1. U.S. Patent No. 7,529,357 (Inmate Management and Call Processing Systems and Methods);
2. U.S. Patent No. 8,340,260 (Inmate Management and Call Processing Systems and Methods);
3. U.S. Patent No. 7,916,845 (Unauthorized call activity detection and prevention systems and methods for a Voice over Internet Protocol environment); and
4. U.S. Patent No. 8,180,028 (System and method for called party controlled message delivery)

In the press release Securus’s CEO states that, “I estimate based on our licensing agreements with other carriers is that GTL will owe us approximately $115 million in license fees – and I expect to collect that, and we have sought a permanent injunction, that if granted, will prohibit them making, using, selling, or offering for sale, any of their products and/or services that fall within the scope of the claims in these 4 asserted patents. This will in all likelihood involve key products and features that they presently are offering. ”

Update (5/4/16): In a case of is the glass half full or half empty, both Securus and GTL have issued dueling press releases concerning a recent PTAB decision invalidating all claims of patent 7,551,732 it had undertaken for review.

At the institution of the PTAB review on 5/1/2015, Securus requested all 27 claims be reviewed for validity. The PTAB board agreed to review claims 1–8 and 11–27, or 25 out of the 27 total claims.

Securus’s press release trumpets, “The PTAB issued its Final Written Decision on April 29, 2016, and found that all instituted claims were invalid, because each such claim was disclosed in Securus’ Patent Number 7,899,167.”

The press release finishes with a quote from Securus’s CEO, “When my investors (equity and debt) ask me why GTL continues to tilt at our formidable advantages in patents, my response is that I believe they have no options left and are desperate. I win business from them, I have much better technology, they refuse to take my ‘Technology Bake Off Challenge,’ I use my own/better people to take good care of my customers, I operate at a much higher level of integrity, my investors like what we do more and are transparent in the way we do business, and I could go on – so desperation I think on GTL’s part.”

GTL’s press release on the final outcome of the case states, “the U.S. Patent Trial and Appeals Board (PTAB) had completed its review of GTL patent 7,551,732, preserving two key elements protecting GTL’s technology for connecting voice streams to storage devices – an essential component for storing inmate call recordings, which is required in nearly every jail and prison in the U.S.  The decision enables GTL to pursue claims now pending in Dallas federal court that Securus Technologies infringes the ‘732, and where experts in the case have estimated Securus could be liable for more than $100M in damages for past use.”

Interestingly, the two claims GTL states that the PTAB “preserved” (claims 9 and 10) were known to be preserved since the PTAB institution decision on 5/1/2015…

Update (4/13/16): Global Tel*Link recently announced that it has prevailed against Securus Technologies in the Inter Partes Review (IPR) of GTL patent 7,853,243, which protects GTL’s technology for biometric and voice validation of inmate calls – widely used features of inmate calling systems and a requirement in many U.S. county jails and state prisons. The Patent Trial and Appeal Board (PTAB) confirmed the validity of all of the ‘243 patent’s claims, clearing the way for GTL to move forward with a pending infringement lawsuit against Securus involving the patent.

GTL has asserted the ‘243 patent against Securus as part of a lawsuit in the U.S. District Court for the Northern District of Texas, targeting alleged infringement by Securus’ “Secure Call Platform,” which Securus has described as the “heart” of its centralized communications management systems. GTL is seeking an injunction from the Texas court to prevent Securus from using its patented technologies, in addition to monetary damages for past infringement.

GTL is currently asserting the following patents in its Texas suit against Securus:

• United States Patent No. 7,853,243, “Telecommunications Call Management and Monitoring System” (filed Dec. 17, 2007; issued Dec. 14, 2010)
• United States Patent No. 7,783,021, “Digital Telecommunications Call Management and Monitoring System” (filed Jan. 28, 2005; issued Aug. 24, 2010)
• United States Patent No. 7,551,732, “Centralized Voice over IP Recording and Retrieval Method and Apparatus” (filed Dec. 7, 2004; issued Jun. 23, 2009)

Update (3/3/16): On February 19, 2016, GTL announced that the PTAB had found invalid all claims in Securus patent 7,805,457. In the press release, GTL states, “The PTAB process and litigation have revealed that Securus misled patent examiners while seeking patents, sought patents for products already in the market, like Apple’s FaceTime, and misled its customers about the capabilities of its products. GTL has challenged the validity of seven additional Securus patents before the PTAB, and the PTAB has already determined that there is a reasonable likelihood GTL will prevail.”

Securus quickly responded with its own, rather lengthy, press release in order to rebut what it called GTL’s, ” grossly inaccurate press release.” Some highlights from the David Letterman-like top ten list shows no punches are being pulled in this ongoing patent and PR war:

Update (1/28/16): On January 22, 2016 Global Tel*Ling announced that it had another win before the Patent Trial and Appeal Board (PTAB), as the PTAB issued two final written decisions invalidating all 36 claims of Securus’ U.S. Patent No. 7,860,222 (‘222 patent).  The ‘222 patent discloses systems and methods for monitoring inmate communications via phone calls, video calls and emails and identifying items of interest, such as keywords, during a call.

In the press release, GTL stated. “As of today, Securus has failed to receive any of the “$50 million” it claims it is owed under the infringement lawsuit filed against GTL. Continued victories at the PTAB clearly validate GTL’s position that assertion of these patents is no more than an overused bullying tool employed by an industry competitor in search of a leg-up. Even in light of the overwhelming evidence, Securus refuses to admit loss, claiming that their patents are still valid due to pending appeals in the Federal Circuit Court of Appeals.  This is empty rhetoric by Securus. The Federal Circuit has yet to reinstate a single claim invalidated by the PTAB since implementation of the current patent review system established by the America Invents Act of 2011.

Further exposing the weaknesses of Securus’ patent portfolio, GTL has filed a second set of post-grant challenges at the PTAB.  Trial has been instituted on all claims challenged in nine out of the 10 proceedings, with the Board determining that there is a reasonable likelihood that all claims are unpatentable.  In the final written decisions received to date regarding Securus and GTL, 95 claims were held unpatentable out of 130 challenged, giving GTL a 73 percent win rate. Yet, another indication that Securus can expect more losses in its patent portfolios in the future.”

Update (1/6/16): On December 29, 2015 Securus announced that it has had two (2) recent wins from the Patent Trial and Appeal Board (PTAB) related to patent invalidation filings by Global Tel*Link (GTL). Despite GTL’s contentions that two (2) Securus patents should be invalidated – the court sided with Securus on these two (2) patents:

1. U. S. Patent No. 7,529,357 – which discloses a system and method for controlling inmate access to a telephone carrier network using voice over internet protocol data packets exchanged between call processing gateways;
2. U. S. Patent No. 8,000,269 – which discloses systems and methods for processing voice over internet protocol calls originating within a prison facility that include an unauthorized call activity detector.

In the press release Securus’s CEO stated, “GTL has filed twenty (20) Inter Partes Reviews to attempt to invalidate Securus patents but has only been successful on invalidating two (2) patents to date. My estimate is that they have spent over $10 million in that effort – so not a very good return on that money for them,” said Smith. “At that rate, they will have to spend in excess of $200 million attempting to invalidate all of our patents – and that effort clearly will not be successful.”
Update (11/19/15): On November 4, 2015, Securus Technologies announced that it has had three (3) recent positive rulings from the Patent Trial and Appeal Board (PTAB) and the Court related to patent infringement cases and Inter Partes Reviews (IPRs) between Securus and Global Tel*Link (GTL).

The decisions are summarized below:

1. Despite GTL’s challenge to the validity of Securus’ 7,324,637B2 patent, in an IPR proceeding, Securus successfully retained 2 of 8 claims of the patent with its key elements determined by the PTAB to be patentable. So the Securus patent continues to stand (Note: IPR Case Number IPR2014-00810);
2. GTL sought damages and attorney’s fees in another patent case in which it alleged Securus had filed improperly – but the Court denied GTL’s request in that case, finding that GTL had been unable to prove any of its damages claims;
3. Two (2) other patents, that GTL claimed were infringed upon by Securus, were found by the Court not to be patentable, because the claims of both patents were too abstract and lacked the “inventive concept” necessary to make them eligible for patent protection.

Update (10/13/15): On October 7, 2015, the United States Patent and Trademark Office – Patent Trial and Appeal Board (“PTAB”) ruled in favor of Securus and against Global Tel*Link’s (GTL) petition to invalidate a Securus patent. The disputed patent was Patent: 6,636,591 B1 “System and Method for Affecting Inmate Conduct with Good Behavior Discount Telephone Rates.”

Update (9/14/15): The Patent Trial and Appeal Board (PTAB) on Friday issued final written decisions granting Global Tel*Link’s request to invalidate two Securus Technologies patents:

• Inter Partes Review of U.S. Pat. 8,577,003 (Centralized call processing), Case Number: IPR2014-00749

And

• Inter Partes Review of U.S. Pat. 7,899,167 (Centralized call processing), Case Number: IPR2014-00493

Friday’s decisions are the first Final Written Orders issued from the 19 patent petitions GTL filed at the PTAB Between March 2014 and May 2015, in which GTL targeted a broad cross section of the Securus portfolio, alleging that the Securus patents mimic available consumer products, like Apple’s FaceTime.  The rulings also signal the imminent demise of Securus’ pending claim in a Dallas federal court that GTL infringed the invalidated patents.

Update (7/2/15): A U.S. District Court judge in Dallas granted GTL’s request to immediately halt proceedings in Securus Technologies Inc.’s patent infringement suit against GTL until after the U.S. Patent and Trademark Office (PTO) decides whether three patents in the case are invalid. For its part, GTL voluntarily agreed to stay its counterclaims for patent infringement in the case so that the lawsuit would be halted in its entirety. Additionally, GTL has claims remaining in two separate cases alleging that Securus infringes a total of five GTL patents. Those cases are proceeding on schedule for trial in Dallas in February 2016, and if GTL is successful, Securus faces the potential of millions of dollars in past damages and the risk of injunctions preventing its use of GTL-patented products or future royalty payments to GTL for use of its technology.

Separately at the PTO, GTL has challenged the validity of 17 Securus patents across a range of technologies, comprising a cross-section of Securus’s patent portfolio. In its petitions to the PTO, GTL has asserted that Securus inflated its intellectual property portfolio by filing duplicative patents with minor changes, obtained patents covering a wide range of technologies already in the public domain and patented by other companies, made misleading statements to a patent examiner and secured patents without inventing any new technology.  Decisions on these patent challenges are expected starting later this summer and continuing through 2016.

Update (6/4/15): According to a new press release, Securus expects some patents challenged by GTL to be invalidated by the PTAB. The release also estimates the cost of GTL’s patent offensive from $18 million to $27 million for those IPRs filed to date.

Securus CEO Richard Smith is also quoted saying, ‘”I can justify a GTL payment to Securus of $115 million, with a 10 to 25 year payment plan – based upon existing, pending, and future patents – for a license granting GTL access to all existing and future patents into perpetuity.  On a net present value basis, that is $61 million – which is at the low end of what other licensees have paid on a percentage basis, so that is an okay deal for GTL.”

One wonders if GTL and Securus, with their frequent, dueling press releases on these cross patent challenges, are negotiating a license deal via press release.

Update (5/19/15): Global Tel*Link Corporation (GTL) today announced that it had filed 10 more petitions at the Patent Trial and Appeal Board (PTAB) as part of an expanding effort to invalidate the core of Securus Technologies Inc.’s patent portfolio.

From the press release, “GTL is determined to end Securus’ legacy of patent litigation,” Oliver said. “We are committed to exposing their baseless claims in court, to end their harassing lawsuits, and to stop the fear tactics that have been a plague on this industry for a decade.”

In these new filings before the PTAB, GTL alleges that 9 additional Securus patents and 209 additional patent claims are invalid. The patents that GTL has challenged include:

Update (4/03/15): In this ongoing patent war, Global Tel*Link has filed a total of 10 IPR’s of Securus’s patents, while Securus has filed three IPR’s against GTL. Additionally, Securus recently issued a press release stating that after a recent federal court ruling cleared the way, Securus Technologies has refiled its federal patent infringement lawsuit against Global Tel*Link (GTL) seeking damages from September 18, 2014. (The original lawsuit is described in detail in our original post below.)

According to the press release, Securus’s CEO estimates “GTL will owe us approximately $50 million in license fees – and I expect to collect that, and we have sought a permanent injunction that will deny them access to key products and features that they presently are offering.”

Here are the USPTO IPR case numbers and the current case status for each:

GTL Inter Parties Review case number & status:

IPR2014-00749, Instituted

IPR2014-00493, Instituted

IPR2014-00824, Instituted

IPR2014-00825, Instituted

IPR2014-00810, Instituted

IPR2014-00785, Instituted

IPR2014-01278 Instituted

IPR2014-01283 Instituted

IPR2014-01282 Instituted

CBM2014-00166 Not Instituted

Securus Inter Parties Review case number & status:

IPR2015-00153 Not Instituted

IPR2015-00155 Instituted

IPR2015-00156 Instituted

Update (7/15/14): According to a Global Tel*Link press release issued today, the original patent lawsuit filed by Securus Technologies (see original blog post below) has been decided in GTL’s favor with the judge dismissing with prejudice all of the claims asserted by Securus Technologies against GTL and barring Securus from filing the same claims. The court also ordered Securus to pay GTL’s costs in the case.

Update (6/3/14): Global Tel*Link has filed with the USPTO Patent Trial and Appeal Board (PTAB) for Inter Partes Review (IPR) of six Securus Technologies’ patents. Introduced by the America Invents Act (AIA) as a counterpart to post-grant review, it is a procedure to challenge the validity of patent claims based on patents and printed publications. A petitioner for inter partes review may request to cancel as unpatentable one or more claims of a patent on a ground that could be raised under section 35 U.S.C 102 or 103 and only on the basis of prior art consisting of patents or printed publications.

The six patents being challenged are:

• Inter Partes Review of U.S. Pat. 8,340,260 (Inmate management and call processing systems and methods), Case Number: IPR2014-00824

• Inter Partes Review of U.S. Pat. 7,529,357 (Inmate management and call processing systems and methods), Case Number: IPR2014-00825

• Inter Partes Review of U.S. Pat. 7,324,637, (Resource allocation system and method), Case Number: IPR2014-00810

• Inter Partes Review of U.S. Pat. 6,636,591 (System and method for affecting inmate conduct with good behavior discount telephone rates), Case Number: IPR2014-00785

• Inter Partes Review of U.S. Pat. 8,577,003 (Centralized call processing), Case Number: IPR2014-00749

• Inter Partes Review of U.S. Pat. 7,899,167 (Centralized call processing), Case Number: IPR2014-00493

Update (5/6/14): Yesterday, Securus filed suit against Global Tel*Link and its Chief Executive Officer, Brian D. Oliver in response to the press release GTL filed on 3/11/14 (link to the press release in the update below). In its complaint, Securus claims, “Recently, unable to beat Securus fairly in the marketplace, GTL has embarked on a campaign to defame Securus in an attempt to damage its reputation in the eyes of its customers, culminating in its issuing a press release in which GTL and its Chief Executive Officer, Brian D. Oliver, egregiously and maliciously published numerous false, misleading, disparaging and defamatory statements about Securus’ products, services, intellectual property, and business practices.”

Update (10/21/13): Global Tel*Link has responded to Securus Technologies’ patent infringement lawsuit and this case is turning into a barn-burner. In a press release issued today, GTL unsurprisingly denies infringing the Securus patents, but also goes on to claim that “Securus is barred by contract from bringing patent claims against GTL, that Securus’ patents are invalid and were obtained through false statements and that GTL does not use Securus’ patented technology in any event.” It has also responded with filed claims of its own alleging that Securus has systematically infringed on GTL’s patented technology and asked the court to stop Securus’ unauthorized use.

Of particular interest is GTL’s claim that Securus’ patents were obtained by false statements. In its response to the court, GTL states that Securus patent 7,899,167 for Centralized Call Processing was obtained through “a knowing and deliberate misrepresentation” of U.S. Patent No. 7,505,406 in a response to a final rejection of the ‘167 patent application by the USPTO as being unpatentable over patent 7,505,406 and that this misrepresentation was made “with the intent to deceive the PTO for the purpose of obtaining allowance of the patent application.” As a result, GTL claims that “the ‘167 patent is unenforceable due to inequitable conduct before the PTO.” The added wrinkle in all this, besides the very serious charge of misrepresentation, is that the ‘406 patent is also owned by Securus (via its predecessor company Evercom). It will be interesting to see how this all plays out…

Update (10/4/13): In our original blog post below, we asked the question whether this law suit was filed “to extract royalties from GTL thereby adding to its cost of doing business (and competing against Securus for lucrative prison telecommunications and video visitation business) or if it is intended to hamstring GTL in the deployment of its competing services by forcing them to work around the patents.” We have some additional insight via a press release Securus issued today.

The press release states, “In the lawsuit, Securus also seeks an injunction permanently enjoining GTL from continuing to infringe Securus’s patents. Securus believes that the requested injunction would significantly impede GTL’s ability to exploit its current products and services in order to serve its existing or prospective clients in the inmate corrections industry. Securus intends to pursue the suit aggressively to a successful conclusion.”

Richard A. Smith, President and Chief Executive Officer of Securus Technologies comments, “It is well known that Securus Technologies has by far the largest patent portfolio in the corrections industry and we have spent in excess of $200 million developing sophisticated technology – and we have solid patents. You cannot operate in our industry legally without having a patent license agreement with us and GTL’s license agreement expired in early August, 2013 – they did not renew the license agreement so we had to file this lawsuit.”

“Without an agreement, GTL cannot legally provide the Securus patented services to prisons and jails – so they cannot run their business and we will ask the Court to stop them,” said Smith. “If I was a GTL customer, I would be very concerned that they may not be able to continue my services – inmate calling is important to facilities and they cannot operate without this method of communication.”

The Original Post:

In a move reminiscent of the patent battle between Apple and Samsung, the two biggest players in the inmate communications services space are squaring off over patents.

Securus Technologies has sued Global Tel*Link (GTL) in the U.S. District Court for the Northern District of Texas for infringing on four of its patents. At this time, it is unclear whether this is a strategy simply intended to extract royalties from GTL thereby adding to its cost of doing business (and competing against Securus for lucrative prison telecommunications and video visitation business) or if it is intended to hamstring GTL in the deployment of its competing services by forcing them to work around the patents. The patents cover services for centralized call processing, analyzing investigative information, identifying members of a gang, and visitation terminal user identification. So Securus is going after GTL for processing detainee phone calls, video visitation services and investigation tools.

The four patents at issue are:

1.) 7,899,167: “Centralized call processing” which includes 21 claims (2 indep.). It was filed 8/15/2003 & granted 3/1/2011.

Systems and methods which provide a centralized architecture for call processing. Embodiments utilize voice over Internet protocols (VoIP) to carry calls from a location at which calling services are provided to a centralized call processing platform providing call processing functionality, such as calling party identification, call validation, call routing, and connection to the public switched telephone network (PSTN). Call processing gateways may be utilized to provide plain old telephone service (POTS) analog line interfaces for use with a plurality of telephone sets disposed for use at a location and at least one wide area network (WAN) interface for providing high speed data communication to a centralized call processing platform. PSTN interfacing by a call processing platform may be provided as a VoIP connection to the PSTN and/or as POTS trunking. Call processing platforms may provide for data sharing, aggregation, and/or analysis across multiple facilities served.

2.) 7,860,222: “Systems and methods for acquiring, accessing, and analyzing investigative information” Includes 36 claims (2 indep.). Granted 12/28/2010.

Disclosed are systems and methods which provide availability of information on a network wide basis, with the network or information technology (IT) fabric spanning a wide range of institutions and other sources of information, including correctional facilities, without regard to which jurisdiction the source of information belongs, e.g. police, courts, federal investigation agencies, public databases etcetera. Embodiments provide an electronic based capability to identify useful information and for locating, collecting, compiling, aggregating, distilling, and/or reporting robust data.

3.) 7,805,457: “System and method for identifying members of a gang or security threat group” Includes 17 claims (4 indep.). Granted 9/28/2010

System and method for monitoring activity of detainees comprising identifying a detainee who is affiliated with a gang, searching one or more databases for information associated with the detainee, and correlating the information to identify individuals who may be affiliated with the gang. The databases may include call record databases, and the information associated with the detainee may include individuals called by the detainee, individuals who visit the detainee, telephone numbers called by the detainee, and sources of funding for the detainee’s calls voice and/or facial biometric identifiers. An alert may be triggered when the detainee calls a specified individual or telephone number.

4.) 8,031,850: “Systems and methods for visitation terminal user identification” Includes 46 claims (3 indep.). Granted 10/4/2011.

Systems and methods which collect information regarding users of controlled environment visitation terminals for identification of one or more parties to a visitation conversation are shown. Identifying information may be provided by various means, such as entry of a PIN, RFID, biometrics, etcetera. Embodiments provide a closed circuit visitation communication system in which a single port of a communication control system is used with respect to a pair of visitation terminals. Embodiments operate to prevent communication between a resident of a controlled environment facility and a visitor while identifying information is collected and verified. Thereafter, the resident and visitor may be placed in communication, whilst the identifying information may be utilized for such purposes as associating a recording of the conversation with the resident and/or visitor, issuing an alert to appropriate individuals that a conversation by one or more parties of interest is being conducted, collect investigative information, etcetera.

The timing is interesting given that the FCC has recently signaled that it will be moving to reduce the cost of interstate long distance calls in prisons and jails as as a result of Proposed Rule Making 12-375. If the FCC does so, this will potentially significantly reduce both companies margins for the highly lucrative detainee long distance calls thereby dealing GTL a one-two punch in its margins and service offering capabilities.

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We post this summary of Global Tel*Link’s upcoming presentation “Mobility In Corrections” at the Corrections Technology Association (CTA) 2013 Annual Technology Summit, without comment…

It is a question of when, not if, are secure mobile phones and/or tablets are used by inmates in a correctional setting. There are natural applications for the use of secure mobile phones include; telephone calls, video calls, music and email using the embedded capabilities of today’s mobile phones. Additional applications could include secure text messaging. What if tablets were introduced to inmates? The potential for positive use is greatly enhanced when considering education and training curriculum is downloaded to the tablet. Administrative functionality such as commissary ordering or kites is also within the realm of possibilities.

Clearly, technology is available to integrate all of these applications and more on today’s mobile phones and tablets. The larger question, though, is what are the security and policy implications from introducing mobility in corrections? Could the phones be used as weapons, trade and/or commerce? Are all inmates eligible to use a mobile phone or just select inmates? Are inmates required to purchase a mobile phone or tablet or are they provided at no cost to the inmate? What are the infrastructure requirements for supporting mobile phones such as power outlets for recharging? What types of batteries are required so as not to thwart drug sniffing dogs? Are there additional revenue generating opportunities for correctional facilities such as a limited selection of downloadable movies the inmates may rent? How do these offerings co-exist in an environment where contraband cell phones are not permitted?

A workshop to openly discuss the questions above and many more is the purpose of this overview and discussion. Technology, however, cannot function alone without well thought out policy and guidelines. The potential exists to enable the simultaneous missions of incarceration, rehabilitation and reduced recidivism while ensuring the safety of staff, the inmates and the outside world. Through a successful partnership between corrections and the private sector, these challenges can be achieved.

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(For more information on this strategy, see our whitepaper “Reducing the Demand for Contraband Cell Phones in Correctional Facilities” which can be accessed by clicking on the download link to the right.)

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Update (4/18/14) The Wall Street Journal reports that Global Tel*Link Corp., the largest U.S. operator of prison phones, is being shopped by its private-equity owner American Securities, according to people familiar with the matter.

The sale process comes as federal regulators have capped the fees companies like Global Tel*Link can charge for interstate calls to and from inmates and as the government considers limiting charges for calls made within state lines.

The Mobile, Ala., company, known as GTL, has been passed between private-equity firms over the past decade, most recently selling in late 2011 for about $1 billion to New York-based American Securities LLC, which is now looking for a buyer for GTL.

It isn’t clear whether regulatory matters were behind the latest private-equity owner’s decision to shop GTL. The company’s chief competitor, Securus Technologies Inc., has also been passed between private-equity firms and last year sold for about $700 million, a price that helped seller Castle Harlan Inc. roughly double its two-year investment, according to a person familiar with that deal.

GTL and Securus have come under scrutiny in recent years for the rates they charge for inmate calls.

(When Securus was being sold in 2013, we predicted that the pressure at the FCC to reduce prison calling rates likely meant reduced profitability for the dominant prison inmate telecommunications service providers Securus and Global Tel*Link…)

Update (12/19/11) American Securities LLC today announced that, in partnership with the company management, it has completed the acquisition of Global Tel*Link (GTL), a leading provider of communications solutions for the corrections industry, from Veritas Capital. Terms of the transaction were not disclosed. Equity was provided from funds managed by American Securities and from management.

“Since its entrance into the inmate telephone industry, Global Tel*Link has been a leading innovator of correctional communications. We are excited about working with Brian Oliver and his team as they continually upgrade GTL’s technology and products to meet the increasing demands of correctional facilities for state-of-the-art telecommunications systems,” said Paul Rossetti, a managing director of American Securities. “Global Tel*Link is the type of investment American Securities looks for: a market-leading company that is well-positioned for continued growth and has a strong management team in place.”

Global Tel*Link is a provider of sophisticated inmate telecommunications services with a leading share of inmates nationwide including 14 of the 20 largest state contracts. Global Tel*Link’s distinctive product line provides facilities with a convenient and secure phone system which requires less administrative supervision and at the same time decreases inmate phone-use fraud. GTL’s products, including LazerPhone® and LazerVoice®, are designed for use in any size facility.

Brian Oliver, GTL’s Chief Executive Officer, said, “We are very enthusiastic about the future of our business. At GTL, we recognize the importance of integrity to our customers, employees and business associates, and everyone works hard to assure that our customers have a satisfying and rewarding experience with us. We look forward to working with American Securities as we develop our long-term growth strategy and continue to build our business.”

Update (11/30/11) Standard & Poor’s Ratings Services said today that its ratings and outlook on Mobile, Ala.-based prison phone provider Global Tel*LinkCorp. (B/Stable/–) are not affected by the increase in the company’s proposed term loan to $635 million from $605 million. The ‘B’ issue-level rating and ‘3’ recovery rating on the term loan and $50 million revolving credit facility remain unchanged. The company intends to use the proceeds from this term loan, along with $389 million of common equity, to fund the buyout of the company’s owners Veritas Capital and Goldman Sachs Direct and its affiliates by American Securities LLC. Pro forma for the transaction and including our adjustments for operating leases, we expect leverage to increase to about 6.2x for the 12 months ended Sept. 30, 2011 from the current 5.3x, which is still within the parameters of the current rating. We expect adjusted leverage to improve to around 5.0x by the end of 2012 following a full year’s contribution from inmate telephone service provider Value-Added Communications (VAC) (acquired in August 2011) and from achievement of some additional cost savings throughout 2012. We also expect leverage to further improve to the high- to mid-4x area thereafter with the full-year benefits of synergies achieved in 2012, which we have conservatively assumed will be about $10 million, or roughly 50% of those targeted but not yet realized. The ‘B’ corporate credit rating and stable outlook on the company remain unchanged.

Update (11/21/11) From the New York State Public Service Commission: PROPOSED TRANSACTION FINANCING
Pursuant to a Stock Purchase Agreement dated October 28, 2011, ASP GTL will purchase all of the stock of GTEL Acquisition Corp. As a result, GTEL Acquisition Corp. will become a wholly-owned subsidiary of ASP GTL, and ASP GTL will acquire control of GTL and its wholly-owned subsidiaries VAC and PCS. Pre- transaction and post-transaction corporate structure charts are shown in Attachment A.

To finance the stock purchase, GTL will enter into a term credit facility of up to $605 million (6-year maturity from the transaction closing date) and a revolving credit facility of$50 million (5- year maturity from the transaction closing date). GTL will retire approximately $558 million of debt (secured by substantially all of the assets and property of GTEL Holdings, Inc., and its subsidiaries, including the Service Providers) at the time of closing. Additional credit, not to exceed $145 million, may be obtained post-closing by GTL. The petitioners therefore request Commission approval to incur aggregate debt of up to $800 million, which will be (a) secured by substantially all of the assets and property of GTEL Holdings, Inc., and its subsidiaries, including the Service Providers and any additional subsidiaries acquired from time to time, including but not limited to a perfected first-priority pledge of all the equity interests of such subsidiaries, including the Service Providers and any additional subsidiaries acquired from time to time; and (b) guaranteed by GTEL Holdings, Inc., and its subsidiaries, including the Service Providers and any additional subsidiaries acquired from time to time.

Update (11/9/11) From the FCC Website: APPLICATION FILED FOR THE TRANSFER OF CONTROL OF GLOBAL TEL*LINK CORPORATION, DSI-ITI, LLC,
PUBLIC COMMUNICATIONS SERVICES, INC., VALUE ADDED COMMUNICATIONS, INC., AND CONVERSANT TECHNOLOGIES, INC. TO ASP GTEL HOLDCO, LLC

On October 28, 2011, ASP GTEL Holdco, LLC (ASP GTL), Global Tel*Link Corporation (GTL), DSI-ITI, LLC (DSI-ITI), Public Communications Services, Inc. (PCS), Value-Added Communications, Inc. (VAC), and Conversant Technologies, Inc. (CTI) (GTL, DSI-ITI, PCS, VAC, and CTI collectively, the Acquired Entities) (ASP GTL and the Acquired Entities collectively, Applicants) filed an application pursuant to section 63.03 of the Commission’s rules to transfer ultimate control of the Acquired Entities to ASP GTL.

DSI-ITI, PCS, VAC, and CTI are wholly owned subsidiaries of GTL. Applicants state that each entity has authority to provide interstate services in multiple states and specializes in the provision of inmate calling services to correctional facilities. GTL is a wholly owned subsidiary of GTEL Holdings, Inc., which is, in turn, a wholly owned subsidiary of GTEL Acquisition Corp. GTEL Acquisition Corp. is wholly owned by GTEL Holding, LLC, the ultimate parent company of the Acquired Entities. All entities are U.S.-based. ASP GTL, a Delaware limited liability company, is not, itself, a telecommunications provider. Applicants state that ASP GTEL Investco, LLC (ASP Investco), a Delaware limited liability company, will own 90 percent or more of ASP GTL. American Securities Partners VI, L.P. (ASP VI), a Delaware limited partnership, will own 95.7 percent of ASP Investco. ASP Investco and ASP IV are private equity entities. The general partner of ASP VI is American Securities Associates VI, LLC (ASA VI), a Delaware limited liability company, that will own 1 percent of ASP VI. The following individuals, all U.S. citizens, hold a 10 percent or greater (but less than 50 percent) ownership interest in ASA VI: Michael G. Fisch, Paul Rossetti, David Horing, and Matthew LeBaron. Applicants state that neither ASP GTL nor any of its 10 percent or greater direct or indirect owners hold interests in any other telecommunications entity.

Pursuant to the terms of the proposed transaction, GTEL Holding, LLC will transfer control of GTEL Acquisition Corp., GTEL Holdings, Inc., GTL, DSI-ITI, PCS, VAC, and CTI to ASP GTL. As a result, GTEL Acquisition Corp. will become a wholly owned subsidiary of ASP GTL, which will own 100 percent of the stock of GTEL Acquisition Corp. and which will result in ASP GTL acquiring ultimate control of GTL and its wholly owned subsidiaries. Applicants assert that the proposed transaction is entitled to presumptive streamlined treatment under section 63.03(b)(2)(i) of the Commission’s rules and that a grant of the application will serve the public interest, convenience, and necessity.

Update (11/4/11): The latest word in the industry is that this is a done deal, though not formally announced yet. And the price is closer to $1B. It should be interesting to see if this is in fact the case and what it means for the current management and operations of Global Tel*Link

There’s gold in them thar prisons.

A Mobile, Ala., private equity company is about to announce a deal to purchase the largest prison phone system in the US, a source close to the situation told The Post, making it one of the few leveraged loan deals to succeed in an almost frozen sector of the finance world.

Terms of the deal could not be determined, but Veritas Capital, another PE firm, and Goldman Sachs, which own the prison phone company called Global Tel Link, were asking $800 million for the operation.

American Securities Capital is expected to announce in a matter of days that it is buying GTL, sources said.

If Veritas and Goldman are able to fetch anywhere close to their asking price, they would pocket a profit of about 450 percent after owning GTL for less than three years, according to The Daily Deal.

GTL provides all prison phone service in Connecticut and New Jersey state prisons, and in Nassau County jails.

Inmates make collect calls, and the people who accept the charges pay GTL, mostly through pre-paid phone cards.

GTL operates monopolies and charges higher-than-normal calling card rates — which could be one reason it was able to attract bank financing while other prospective deals are withering on the vine.

Some have accused GTL and its rivals of price-gouging.

GTL in Connecticut charges $3.95 plus 89 cents a minute for interstate calls, according to Paul Wright, executive director of the Human Rights Defense Center.

Among the many complaints Wright said he hears is GTL and its smaller competitors require people to pay $4.50 to get $25 or $50 pre-paid cards before they can accept collect calls from prisoners, and GTL does not rebate unused dollars.

Goldman declined comment. American Securities and Veritas did not return calls.

Source

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