By Rich Connell, Los Angeles Times

May 13, 2010

A central narrative of Republican Steve Poizner’s gubernatorial campaign has been his entrepreneurial prowess: the engineering grad who got a master’s from Stanford, made a fortune in Silicon Valley and turned his wealth and talent to public service.

Underscoring the theme, Poizner describes himself on next month’s primary election ballot as “businessman,” although as state insurance commissioner since 2007 he’s essentially been a government regulator.

“Most of my career is starting and running companies,” Poizner said in an interview.

That background helps define him, he said, and the skills he’s offering voters: “the ability to take risks and to have the creativity and the initiative to figure out how to deal with obstacles as they come up in order to actually get something done.”

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Poizner’s most notable private-sector feat was founding and, within a few years, selling a company he says put life-saving locating technology in 700 million cellphones. The $1-billion deal with tech giant Qualcomm multiplied Poizner’s wealth, allowing him to largely self-finance a political career, including more than 90% of his $23-million campaign for governor.

Poizner’s discipline and command of business impressed even some high-tech rivals. “He was always very concise, very intelligent,” recalled Michael Amarosa, an executive with True Position, a company that was locked in a high-stakes regulatory battle with Poizner’s firm in the 1990s.

However, the sunny image of Poizner’s success pushed by his campaign — and a new memoir whose publication coincided with the race for governor — is at odds with portrayals by some who dealt with the candidate and his company while he was on his way up. Those accounts, from court records and interviews, challenge the way Poizner has framed a signature business achievement.

The cover of his book says Poizner was “founder of SnapTrack Inc., the inventor of mobile-phone GPS technology.” But federal lawsuits have accused the company, which made Poizner the bulk of his fortune, of infringing on others’ intellectual property.

One ongoing suit in federal court in San Diego, dealing partly with the period when Poizner ran the company, says it is seeking to “hold technology thieves responsible for their wrongful conduct.” Poizner is not a named defendant, but the suit claims that as chief executive officer he participated in discussions in which false assurances were given that another company’s intellectual property would be protected.

Poizner said neither he nor his firm ever infringed on others’ intellectual property. He suggested that the suits aimed at his former company are typical of some in the highly competitive technology field.

The San Diego suit was filed by Gabriel Technologies, a successor company to Locate Networks, which signed a licensing agreement with SnapTrack, according to court records. The suit alleges that in early 1999, Poizner joined talks on the agreement.

Poizner represented that technology covered in the agreement “would be jointly owned and that the parties would set up a process to protect such joint ownership rights,” the suit alleges. “These statements were untrue or misleading when made.”

The suit, filed in October 2008, claims SnapTrack misappropriated Locate’s technology and used millions from the agreement “to keep SnapTrack afloat while negotiating a billion-dollar buyout.” Qualcomm and SnapTrack denied the allegations in their court filings and disputed Gabriel’s characterization of the business agreements. A trial date has been set for next year.

Another federal infringement lawsuit was filed against SnapTrack in Colorado by Navsys Corp., a company also focused on GPS and cellphone technology in the 1990s.

“Steve Poizner contacted us,” recalled Navsys founder Alison Brown. Her initial positive impression of him changed during talks on a possible licensing agreement, she said. SnapTrack wanted exclusive rights to her firm’s technology but wasn’t saying how it would be used, she said.

“He certainly wasn’t upfront,” she said. The talks ended, and her firm later sued, she said, because it appeared SnapTrack had encroached on her company’s patents.

Poizner was not a named defendant, and Navsys dropped the suit before SnapTrack filed a response. Brown said her firm decided it couldn’t afford the legal battle.

Poizner said he was unfamiliar with the Gabriel and Navsys lawsuits. But he said, “People are trying to profit off of the massive success of Qualcomm and SnapTrack in creating the industry standard when it comes to tracking cellphones.”

No claims of misconduct or patent infringement have been sustained against him or his former firm, Poizner said, and Qualcomm researched the validity of SnapTrack’s patents.

He also noted that a jury found in favor of SnapTrack and Qualcomm in an infringement lawsuit filed in Northern California by Zoltar Satellite Alarm Systems. Those allegations were “proven absolutely false,” he said.

SnapTrack and Qualcomm won a jury verdict and a judgment against Zoltar on patent infringement claims, records show. Jurors sided with Zoltar on counterclaims challenging the validity of the firm’s patents.

Zoltar founder Dan Schlager took issue with the assertion that Poizner’s company invented cellphone GPS technology.

“I would say he certainly was a contributor. But there were people beside him — and not just me — that were working on this problem,” he said.

Qualcomm believes the Gabriel Technologies case has no merit, said spokeswoman Christie Thoene. The company prevailed in the Zoltar lawsuit, she noted, adding that she was unfamiliar with the Navsys case.

As SnapTrack developed its GPS technology, Poizner faced another test of his entrepreneurial skills, as a special interest trying to bend the Washington regulatory process his way.

The Federal Communications Commission required cellphone companies to provide 911 centers with data to locate callers. The ruling favored existing technology that used networks of cell towers to find those in need.

Poizner’s firm and others wanted commissioners to include a GPS-linked alternative technology. In his book, Poizner recalls his company wanting “to make friends” at the FCC because altering the regulations was key to making his product viable.

Poizner met with commission aides and staff members, FCC records show, and his firm hired Washington law firms to press the panel to reconsider. Lobbying records show SnapTrack retained an influential firm, Wiley, Rein & Fielding, whose principals include a former FCC commissioner, to contact congressional officials and the FCC.

Companies that developed the older technology claimed that SnapTrack’s technology was still emerging, was unproven and might jeopardize public safety by delaying 911 call tracking.

In September 1999, the commission agreed to include the SnapTrack-type technology. The panel said it was making a tradeoff between potentially faster implementation of 911 location requirements and the promise of greater accuracy and wider coverage using GPS systems.

SnapTrack was bought by Qualcomm a few months later. Poizner won’t disclose his net worth, but securities records suggest he received nearly $200 million from one Qualcomm stock transaction.

Poizner remained with the company about a year before turning to public service and politics. He spent a year as a White House fellow, led a charter-school movement and ran unsuccessfully for state Assembly before being elected California insurance commissioner.

Controversy has enveloped a more recent Poizner venture: publication of his book. The memoir recounts a year during which Poizner taught a class at East San Jose’s Mount Pleasant High School. Among the challenges he describes is persuading his students to embrace writing and understand the importance of using it to express their thoughts and opinions.

The book has been criticized by the school’s principal and others who say it paints an inaccurately bleak picture of the community. Poizner and some supporters at the school say it is a realistic depiction.

Poizner, who trails former EBay chief Meg Whitman in the Republican contest for governor, cited the book in a March election filing to help support his identification as “businessman” on next month’s ballot. The book was “my principal business venture” over the last year, the filing says, and included negotiating a book deal and planning a marketing campaign. Profits go to the school, but Poizner said he did not yet know what those would be.

The venture also involved “securing a co-author,” according to Poizner’s filing. Online promotional material for the book, and release lists published by some libraries, credit the book to “Stephen Poizner with Andrew Tilin.” Tilin is a freelance business writer.

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