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It seems to me that all parties are at fault. The GPS industry should have been working hard to develop filters since there was a "for rent" sign above their patio on the adjacent empty lot. The FCC should have put an asterisk on that 'for rent' sign with some fine print that read: "*you have to let the neighbors use this patio." And finally, Lightsquared should have done due diligence in their planning of this network. I would have to imagine that potential issues regarding GPS interference would have surfaced pretty early. Sure they might be 'in the right', but that doesn't matter so much when you are dealing with government. They could probably get some judges to side with them, but the time and money would probably be better spent in finding an alternate spectrum.
It's a damn shame. I'd like to see this network realized.