RIM suffers a court setback
Research in Motion Ltd., maker of the BlackBerry handheld email device, suffered a setback in a potentially damaging patent infringement suit yesterday.
U.S. District Judge James Spencer told a hearing in Richmond, Va., he would consider whether a disputed $450 million ( U. S.) settlement with patent holding company NTP Inc. was enforceable before deciding whether to go forward with an injunction that could halt BlackBerry sales. The U. S. Patent and Trademark Office earlier this year completed a re- examination of eight NTP patents and issued initial rulings rejecting all of the claims — but it could take years for a final conclusion.
“ Frankly it’s highly unlikely that I’m going to stay these proceedings. . . . I don’t run ( patent office) business and they don’t run mine,” Spencer said.
Shares of Waterloo- based RIM tumbled 4.34 per cent in Toronto, falling $ 3.28 to close at $ 72.31. The company had no comment on the court hearing. American Technology Research analyst Rob Sanderson said RIM risked imposition of an injunction before the patent office completes its work.
“ It takes one of the positive scenarios away from RIM, taking the judge’s comments at face value, which I think we should,” said Sanderson.
If there is no settlement and an injunction is imposed, RIM could implement a “ workaround” solution using different technology that it says does not infringe on NTP’s patents, Sanderson said. NTP filed its suit against RIM in 2001 in U. S. District Court for the Eastern District of Virginia. A jury found in favour of NTP in 2002.
In 2003, Spencer granted an injunction that would have halted U. S. sales of the BlackBerry and shut down its service, but stayed the injunction pending appeal. An appeals court in August scaled back the ruling against RIM, but upheld some patent infringement claims.
Requests by RIM to get the courts to stay the case, including a recent request to U. S. Chief Justice John Roberts, have failed. RIM and NTP reached a settlement in March, but the deal fell apart in June in a dispute over how to interpret its terms. RIM wants the settlement enforced.
Meanwhile, RIM is facing new competition from Nokia and Microsoft, which are almost giving away software in an attempt to muscle in on wireless email business.
Their new products may leave investors wondering how RIM will compete, rekindling memories of companies such as Netscape, which had to give away its Internet browser when Microsoft decided to do so.
Analyst Andrew Neff at Bear Stearns says Nokia and Microsoft have interesting products but no market share. “ For now, BlackBerry is the only game in town and pricing it that way.”