March 2006
The use of legal weapons to push the price of settlement or the almost final chapter in the Blackberry saga
Research in Motion (RIM), the maker of the BlackBerry portable email device and patent holding company NTP Inc finally settled their long-running patent infringement dispute for $612.5 million (£350 million).
RIM and NTP have been locked in patent disputes for over a decade. NTP always claimed it owned a suite of patents relating to Blackberry’s wireless e-mails technology.
The two companies announced last week that they had signed an agreement under which RIM has paid NTP $612.5 million in full and final settlement of all claims and for a perpetual, fully paid-up license to operate the BlackBerry service. It also covers claims that NTP may have had against RIM’s partners or third party sellers and providers of RIM products and services.
The one-off payment of $612m is lower than the $1bn NTP is understood to have sought during the negotiations but larger than the $450m the two sides agreed to in principle early last year.
In a court hearing the previous week, Judge James Spencer of the US District Court for the Eastern District of Virginia expressed his surprise that the parties had left this crucial business decision to the court and that the case had not settled. He also hinted that he would agree to NTP’s request to grant an injunction prohibiting RIM from US sales of the BlackBerry and any other products, software or services using the wireless technology in dispute. The infringement action is now dismissed.
The settlement is a major relief not only for the private and corporate users who are increasingly dependent on their hand held device but also for government workers and officials.
The US Justice Department had even petitioned the Court, requesting it to ensure that any injunction would not affect Government workers alleging that a shutdown would have a damaging impact on its officials.
RIM had vowed to fight all the way. It had re-engineered its system to develop a software work-around that would enable it to maintain the BlackBerry service without infringing NTP’s patents. But the development of this modification would have required substantial R&D effort from RIM and software updates in the event of an injunction. There could also have been a new trial every time the software was updated.
In the end, the pragmatic solution was to settle. Uncertainties surrounding the dispute were affecting sales of the handset with US corporate and retail customers deferring BlackBerry purchases.
Despite the settlement, the US Patent and Trademark Office (USPTO) will continue to re-examine the patents involved in the dispute. The USPTO has so far issued preliminary rejections in respect of the whole suite of patents, and final rejections in respect of two out of the three involved. The final determination of the re-examination process, which may take years to complete, will have no effect on the settlement. The USPTO could take a year or so to formally invalidate all of the patents, should it decide to do so. Judge Spencer had already said he would not have held up the legal case while the patents were being re-examined.
Because a patent is not considered invalidated until all appeals are exhausted – and that can be all the way to the Federal Appeals courts-, patent law and case law do not intersect until the very end (sometimes not even at all).
Should patent holding companies have an affect on federal-court injunction hearings in infringement cases?
RIM has filed an amicus brief in a U.S. Supreme Court with eBay Inc. vs. MercExchange LLC in Great Falls, Va. In that case RIM supports eBay and voices concerns that MercExchange and other "patent assertion companies" can use the threat of sales injunctions as "drastic remedies" to try to obtain licensing payments that "far exceed the value of the patented invention."
Visto, a Californian mobile e-mail specialist is also suing Microsoft for patent infringement. The technology allows a remoter device to synchronise and exchange data with the source of information within the company firewall. One patent has recently been re-examined by the Patent Office and found to be valid. Unlike NTP, Visto has a business in its own right.