The $1.2-billion lawsuit against the federal government by the original backers of wireless startup Mobilicity is moving ahead, according to a report in the Globe and Mail. An article appearing on the newspaper's website Tuesday said the Ontario Divisional Court last week rejected the government's motion seeking leave to appeal, and the government is now expected to file a statement of defence. The case was launched in September last year by New York-based investment firm Quadrangle Group LLC. and John Bitove's Data & Audio-Visual Enterprises Investments Inc., who claimed the government lured Mobilicity into Canada's wireless market with promises that were later reneged upon, such as that spectrum from the 2008 AWS auction would be allowed to be sold to wireless incumbents after a five-year moratorium expired. Mobilicity spent $243.2 million in the 2008 AWS auction and launched service in 2010, only to struggle and enter bankruptcy protection in September 2013. The government blocked several attempts by Telus Corp. to acquire Mobilicity and its spectrum, but earlier this year permitted a takeover of Mobilicity by Rogers Communications Inc.