Could the Days Be Numbered for the Blackberry?

You see them everywhere. People hovering over them, sending emails from the street, the airports, taxis, restaurants, everywhere. It seems there is almost an epidemic of them. That is not far from the truth as there are many millions of them about. In any metropolitan area happy hour, it seems more like a PlayStation convention than professional unwinding after a long day of work. What are all of these people so addicted to, so engrossed with?

The Blackberry. The combination phone, organizer, calendar, and, oh yes, wireless email capable devise that is the flagship product of RIM, or Research in Motion.

However, this mainstay of corporate and governmental communications and user addiction could, thanks to a patent infringement suit and the potential of a service-ending injunction, soon be a thing of the past.
The Blackberry was introduced in the late 1990’s and quickly became one of the hottest items in wireless communications. Things were going quite well for RIM until November of 2001 when NTP, Inc. appeared on the scene and set up a modern day David and Goliath battle.

RIM is a huge telecommunications company founded by two Canadian engineers. The two began work on the Blackberry in the late 1980’s and ultimately gained more than 3 million subscribers and net sales in 2004 of more than $1.35 billion. NTP, Inc., on the other hand is but a shadow, a very small shadow, compared to RIM. NTP, Inc. is a company without tangible product, salesmen, staff, sprawling corporate headquarters, or really anything else that typically comes to mind when you think of company that would be involved in a battle over one of the most innovative communications devises the world has ever seen. In actuality, NTP, Inc. is what has been called a “virtual company.” The Virginia corporation holds eight patents relating to wireless communications, and those eight patents make up the entirety of the company. Period. In fact, the communications engineer who developed the patents died in 2004.

Prior to filing suit in 2001, NTP, Inc. contacted RIM to discuss settlement, but after preliminary discussions, nothing was offered, so the suit proceeded. For more than three years, the suit worked its way through the trial calendar of the Federal District Court in Richmond, Virginia. It is not unusual for large corporation such as RIM to drag out a patent infringement case when sued by a small and less financially capable Plaintiff, such as NTP, Inc. Such strategy frequently results in a settlement, sometimes for a relatively small amount called a “nuisance value.” At worst, generally, this strategy results in the larger corporation paying a portion of the lost profits to the patent holder. While litigation expenses can be a large factor, sometimes the smaller Plaintiff’s just go away, not being able to fund the protracted litigation. However, it seems that if RIM was attempting this strategy, it didn’t work very well. In 2003, a jury found that RIM had violated a number of the patents and awarded $51.6 million dollars to NTP, Inc. (To date, this has not been paid by RIM as the matter is still under appeal, but post judgment interest has been accruing on the verdict making the original jury award now worth in excess of $250 million.) Following this verdict, the district court judge issued an injunction against RIM. RIM appealed the case and the injunction was stayed pending the appeal, so the Blackberry remained operational for the time being; however as the case has continued, so has the potential for an injunction.

Well, the Court of Appeals for the Fourth Circuit upheld the jury verdict on the initial appeal and upon a rehearing on the case, the verdict was upheld again.

At this point, the settlement talks got serious. Really serious. The result of the talks was an announcement that RIM would pay NTP, Inc. up to $450 million to resolve the case. But alas, it was not to be. The settlement fell apart and the parties were back in Court, the threat of an injunction still hanging over RIM.

At present, the injunction to shut down the Blackberry service is still under the Court’s stay; however, little positive has happened for RIM and their options are running out. In January, RIM’s appeal to the United States Supreme Court was denied. NTP, Inc. has also petitioned the district court in Richmond to issue an injunction prohibiting RIM from selling any additional Blackberry devises. A hearing on this issue has been scheduled for the end of February, 2006. The one positive event for RIM was a recent U.S. Patent and Trademark Office decision that denied some of the underlying NTP, Inc. patents; however, this decision is subject to appeal by NTP, Inc. Reports have stated that RIM is hopeful that the district court judge would consider the Patent and Trademark decision and deny the injunction, but whether the Court will do this won’t be known until after the hearing on the issue.

Opinions vary on whether there will be an injunction on the use and sale of the Blackberry. If there is an injunction, it is likely that any users of the devise would have some degree of a “grace period” in order to obtain a different wireless technology. But at present, the future of the Blackberry is uncertain at best and until the suit is concluded, the possibility of an injunction looms ever large for RIM and the users of the Blackberry.

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