Yes, expensive filters could resolve the problem with GPS but they were not included because the adjacent frequencies were designated low power so they wouldn't cause interference.
What would the FCC do if a low power radio station decided to broadcast at 50,000 watts so they could make more money and it caused interference with established stations in the area? Would they make you replace every radio you already own, or would they enforce the original restriction in broadcast power?
If the FCC placed restrictions on how much power could be used on those bands and this company is violating those restrictions then they’re going to lose, and deservedly so.
But - if they are staying within the power restrictions they’ve got a case.
At this point we need to see spelled out what the FCC’s actual regulations were when they issued LightSquared their licenses for the frequencies they’re using, and we need to see spelled out what LightSquared’s actual plans are for those frequencies. If the FCC set up regulations on those frequencies taking into account the limitations of consumer-based GPS receivers and LightSquared is gaming those regulations then I’ll side with LS’s opponents.