Research In Motion Ltd. (RIM) and NTP Inc. have settled their
long-standing legal battle, with RIM paying NTP US$612.5 million to
settle all of NTP's patent claims against it.
NTP has granted RIM an unfettered right to continue its
business, including its BlackBerry business, according to a RIM
statement. All terms of the agreement have been finalized and the
case against RIM was dismissed by a court order Friday
afternoon.
The case had threatened to shut down service to most of the
millions of BlackBerry users in the U.S. NTP was seeking an
injunction against RIM in the U.S. District Court for the Eastern
District of Virginia. At a hearing last week, Judge James Spencer
did not rule on the injunction but slammed the companies for
failing to settle the case. RIM had said it had a workaround for
the RIM service that would steer clear of NTP's patents. There's no
question we took one for the team here... It's not a good feeling
to write this check for patents that will not survive for sure. Jim
BalsillieChairman and co-CEO, Research in Motion Ltd.Text
The agreement relates to all patents owned and controlled by NTP
and covers all of RIM's products, the statement said. It eliminates
the need for any further court proceedings or decisions, RIM
said.
RIM made the deal to get the dispute out of the way, said Jim
Balsillie, chairman and co-Chief Executive Officer (CEO) of RIM, in
Waterloo, Ontario.
"The absolute motivation was really to give clarity and
certainty to all our ecosystems so we can really start our new
[fiscal] year, which starts Monday ... with no more of the noise
and distraction of this suit," Balsillie said on a conference call
after the deal and RIM's fourth-quarter earnings were
announced.
Balsillie said the settlement covers all partners and all
technologies. "It was very important to get the scope we wanted,"
he said.
Users expressed relief at the settlement and annoyance at the
lawsuit.
Judy Wilks, a Blackberry user and San Francisco-based vice
president of public relations (PR) firm Bite Communications, said
she is pleased the patent dispute has been resolved and the threat
of a service interruption has ended. "We PR people are addicted to
our BlackBerries, so would have been at a loss without them," she
said. "We love being connected at all times."
Justin Beech, who owns and runs DSLreports.com, in New York, was
not surprised at the deal.
"Actually, I never thought they'd turn off service; too many
powerful people depend on them. And I also think NTP is abusing the
patent system, so I am a little annoyed that RIM blinked and
basically funded their next half dozen court cases," Beech wrote in
an e-mail message from his BlackBerry.
The NTP patents involved in the case have been found invalid by
the U.S. Patent and Trademark Office and are still in the midst of
what may be a lengthy re-examination process. Balsillie said RIM
did not feel good about settling over questionable patents.
"There's no question we took one for the team here. At the core,
it's just over three bucks a share, and in that respect it sounds
like a prudent thing for the company. ... It's not a good feeling
to write this check for patents that will not survive for sure," he
said.
The deal takes a load off the back of RIM as it faces growing
competition, but users may still have anxiety about having one
company control devices, network operations centers and connections
to carriers, according to Bob Egan, an analyst at Tower Group, a
market analysis company in Dedham, Massachusetts. A threat to that
one company's technology can wreak havoc, he said.
"Proprietary closed-loop systems present some benefits, but they
also present a certain atmosphere of risk in the marketplace," Egan
said. Emerging competitors such as Microsoft Corp. and Sybase Inc.
don't have the same liability, he added.
At the hearing last week, RIM's lawyers, including Henry Bunsow,
argued an injunction would hurt the U.S. economy because BlackBerry
devices play a "crucial role" in important industries such as
hospitals, utilities and banks.
NTP lawyers said RIM had continued to use NTP's technology even
though a jury ruled for NTP in its claim for wireless e-mail
patents in August 2003.
In August 2003, the U.S. District Court for the Eastern District
of Virginia ruled in favor of NTP, based in Arlington, Virginia,
and ordered RIM to pay damages of US$53.7 million.
In December 2004, the U.S. Court of Appeals for the Federal
Circuit rejected an earlier injunction issued by the Virginia
district court. The district court issued the original injunction
in August 2003 but stayed the ruling pending appeal. (Additional
reporting by Grant Gross in Washington and Robert McMillan and
Elizabeth Montalbano in San Francisco).
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