Compliance Toolkit

RIM's future hangs in balance

Richard Shim CNET News

Published: 06 Aug 2003 13:55 BST

A judge has ruled in favour of holding company NTP in its patent-infringement case against BlackBerry-maker Research In Motion, awarding monetary damages and fees.

The US District Court for the Eastern District of Richmond, Virginia, ruled late on Tuesday in the case brought against RIM. It awarded NTP $53.7m (£33.40m).

The court also granted an injunction preventing RIM from making, using, or offering to sell handhelds, services or software in the United States. The injunction will remain in effect until the date of expiration of NTP's patents, the latest of which is 20 May, 2012. The court then stayed that injunction, pending an appeal by the Canadian company.

The two sides have been engaged in a legal dispute since late 2001, when NTP claimed that RIM infringed on its patents covering the use of radio frequency wireless communications in email systems. RIM's BlackBerry service, software and devices allow individuals to wirelessly send and receive information, such as email and company data, on handheld devices.

"This ruling is a road map for what will happen to RIM if they don't win the appeal," said Jim Wallace, an attorney with Wiley Rein & Fielding, who represented NTP in the case.

Wallace added that NTP will continue to negotiate patent licensing arrangements -- including, possibly, an exclusive licence -- with manufacturers. Wallace declined to comment on what the terms or royalty rates would be for any licences but added that RIM would not necessarily be excluded from consideration.

RIM said in a statement that it was gratified that the judge did not make the injunction take effect immediately.

"We are obviously pleased with today's ruling and believe that the District Court's decision to stay the injunction is especially appropriate given the frequency of successful appeals at the appellate level as well as the specific merits of RIM's appeal," Henry Bunsow, the attorney representing RIM, said in a statement.

Bunsow said RIM is still seeking a re-examination of NTP's patents by the US Patent and Trademark Office. "While the remaining re-examination and appeal processes may take several years to complete, we remain confident that RIM will ultimately prevail in this matter," Bunsow said.

Wallace added that RIM has 30 days to file the appeal and that he expected it to be at least another year before a court would make a final decision on RIM's appeal.

The US is RIM's largest market, and while the monetary award will push RIM's point of profitability out a bit further, NTP's case shouldn't hurt RIM's future dramatically, according to Jason Tsai, an analyst with ThinkEquity Partners.

"It doesn't do NTP any good to shut RIM down, because its business is based on licensing... we believe that RIM will settle at some nominal licensing rate and while we view this as a short-term negative... the long-term effects will be minimal."

In its earnings reports, RIM has been stating two sets of results, depending on the outcome of the infringement case. A negative ruling would bite into RIM's financial results.

The BlackBerry maker is also embroiled in a series of lawsuits with start-up Good Technology. RIM's latest request for injunctive relief against Good Technology was thrown out.

RIM shares traded lower, dipping $3.16, or about 11 percent, to $25.12 at the close of the financial markets. Shares slipped lower in after-hours trading, dropping to $22.99 on the Island ECN electronic marketplace.