By STEPHANIE STOUGHTON, AP Business Writer
Say what you want about patent infringement suits, but at least the
BlackBerry case has drama.
A federal judge, clearly impatient with the long-running case, could
issue an injunction soon on U.S. sales and service of the wireless
Most patent suits are dismissed or settled long before they reach this
stage. Remarkably, neither BlackBerry maker Research In Motion
Ltd. nor tiny patent holder NTP Inc. have shown signs of backing
down. In effect, they're daring each other to blink first and settle.
Governments, businesses and individual users are growing unnerved by
the standoff. Although the odds of an actual shutdown are low,
conflicting opinions about the possible outcomes and the spin from
both sides have created a confusing picture.
James R. Spencer, a no-nonsense U.S. district judge widely respected
in the legal community, now finds himself in the unusual position of
weighing an injunction against RIM even as the U.S. Patent and
Trademark Office is expected to finally rescind NTP's patents.
"These patents are ... guaranteed to go in the garbage," James
Balsillie, co-chief executive of Canada's RIM, said in December. "At
the end of the day, our position is real simple: Let the system work."
Unfortunately for Balsillie, the system doesn't necessarily work in a
timely fashion. Spencer has signaled that he is unwilling to delay his
proceedings while awaiting final word from the patent office, which
lags far behind the court system. A case that could change the
practice of granting injunctions in patent cases, eBay
Inc. v. MercExchange, will be taken up by the Supreme Court, but no
decision is expected until the spring at the earliest. Spencer,
meanwhile, has scheduled a hearing for Feb. 24 on the injunction and
Because patent infringement cases don't often rise to this level of
importance and even fewer make it this far in the courts, it's hard to
tell how Spencer will rule. An injunction he once issued on a
sediment-control device, for instance, interested few people outside
the construction industry. RIM v. NTP, on the other hand, could affect
many of the more than 3 million BlackBerry users in the United States.
"His bottom line is that he wants this case off his docket," said
Susan Dadio, a patent attorney in Alexandria, Va. "And if the two
sides can't reach a settlement or resolve this, he will not be afraid
to act himself."
Arlington, Va.-based NTP was co-founded by the late Thomas Campana
Jr., an engineer who in 1990 created a system to send e-mails between
computers and wireless devices. He is survived by his wife, who owns a
large stake in NTP.
The BlackBerry hit the market in the late 1990s, becoming popular with
lawyers, consultants and others who wanted to check e-mails away from
their office and home computers.
In 2001, NTP filed suit. A year later, a federal jury in Richmond
agreed that RIM had infringed on NTP's patents. The jury awarded the
small firm 5.7 percent of U.S. BlackBerry sales, a rate that Spencer
later increased to 8.55 percent.
Spencer issued an injunction in 2003 but held off on its enforcement
during RIM's appeals. Those efforts largely failed and the case
returned to his court last year.
Government and emergency workers would be exempted from any BlackBerry
blackout, but the Justice Department has asked Spencer to hold off on
an injunction until the details can be sorted out.
If granted, that delay would also permit corporate and individual
BlackBerry users to switch to other devices or to download new
software that RIM claims would work around NTP's patents.
RIM executives say the new software will prevent any service
disruptions, but they have released few details. Some analysts are
questioning the viability of the workaround and whether it might
inconvenience users or degrade service.
The unanswered questions in the case have led thousands of companies
to contact consultants in recent weeks for advice on alternative
technologies, though few have actually made the switch.
At United Parcel Service Inc., as many as 3,000 managers, executives
and technical support employees use BlackBerries. In the worst-case
scenario, the company would switch those users over to Palm Treo
handhelds, which are used by other employees, said Donna Barrett, a
David Johnson, infrastructure technology director for Grant Thornton
LLP, said the Chicago-based accounting firm has been moving away from
BlackBerries to a variety of devices supporting Microsoft Corp.'s
Windows Mobile operating system.
That move has been due to personal preferences rather than the RIM
litigation, but now the firm has asked two wireless providers to be
prepared to supply backup devices for some of its 550 remaining
Even so, Johnson hopes RIM and NTP will work out their differences.
"If they want to kill each other and put each other out of business,
all they're going to do is drive people to Windows Mobile faster,"
Johnson said. "This is stupid is as stupid does."
Analysts and others say both sides should settle. RIM would be able to
avoid the headaches of the injunction and focus more on its business,
especially with Microsoft posing a greater threat.
And NTP, they say, would fare better with a fat settlement (perhaps
beyond the $250 million RIM has deposited in escrow) while continuing
to reap royalties from licensing agreements with RIM competitors Nokia
Corp., Good Technology Inc. and Visto Corp.
Those companies have only small pieces of the wireless e-mail market
dominated by RIM. And eventually, some analysts say, the patent office
would catch up to NTP, eliminating its leverage.
"Their days of milking these patents are nearing their end," Gartner
analyst Ken Dulaney said, referring to NTP. "If they are indeed
worried about the poor widow Campana, they should take the money."
Copyright 2006 The Associated Press.
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