Key ruling in Blackberry dispute imminent

NTP and RIM's long-running patent battle over the Blackberry e-mail device appears to be wrapping up, with a key ruling expected next week.

An important ruling in the ongoing patent dispute between Blackberry manufacturer Research In Motion (RIM) and NTP could come as early as this Tuesday, as RIM puts the finishing touches on a "workaround" that it claims sidesteps NTP's patents.

This week, Judge James Spencer of the U.S. District Court for the Eastern District of Virginia will consider two motions filed by the parties in the case, said James Wallace, an attorney with Wiley Rein & Fielding LLP and NTP's lead counsel, in an interview Friday. NTP has filed a motion seeking a judgment that a proposed settlement between the two companies was never a final deal, and RIM has filed a motion asking the court to stay the case while the U.S. Patent and Trademark Office (PTO) finalizes its review of NTP's patents. The PTO has issued preliminary decisions striking down all of NTP's patents.

The long-running case seems to be hurtling toward a conclusion as various appeals from RIM have proven unsuccessful. NTP sued RIM in November 2001 alleging that the popular Blackberry wireless e-mail devices and software infringe on patents held by NTP. In 2003 a jury agreed with NTP, and RIM has been unable to overturn that verdict.

However, in December 2004 an appeals court did lift an injunction against the Blackberry devices and software imposed after the 2003 verdict but stayed pending the appeals process. The appeals court decided that the lower court incorrectly interpreted one aspect of the patent claims, and therefore needed to re-evaluate the original decision and injunction. But the appeals court upheld the finding of infringement on most of NTP's patents. NTP plans to once again seek an injunction against the Blackberry devices after the Virginia court, Wallace said.

Earlier this year the companies announced they had settled the litigation, a deal that would have given RIM a perpetual license to the patents in exchange for US$450 million. But the deal fell apart in June. RIM thought it had a final agreement when it issued the press release in March, but NTP said the companies had never finalized their agreement, and the appeals process continued.

The U.S. Supreme Court in October refused to order a stay in the case while it decided whether to hear RIM's appeal, returning the case to the Virginia court and the looming injunction. RIM does not expect the Supreme Court to hear its case, forcing it to make its last stand in Virginia over the coming weeks. Even if the PTO's final rulings invalidate the patents, NTP can appeal that decision and any court judgments made before the patents are thrown out will stand while that appeal is considered, Wallace said.

The threat of an injunction banning sales of the Blackberry in the U.S. is spurring interest in the case across the business community because of the popularity of Blackbery devices. They allow users to read and reply to e-mail from anywhere, and executives, salespeople and even consumers can be seen tapping away at the Blackberry's keyboard on trains, in airports and over coffee all across the U.S.

The U.S. Department of Justice filed a brief last week asking the court to find a way to keep the service going even if it decides to impose an injunction, given the number of users within the U.S. government that depend on their Blackberry devices.

Should that injunction be imposed, RIM believes it has come up with a way to bypass the patent claims, RIM Chairman and Co-Chief Executive Officer Jim Balsillie said in June. This week, Balsillie said RIM is finalizing the software upgrade that would allow it to continue to operate the Blackberry system after an injunction, although he declined to specify exactly how this software works in a manner that does not infringe on NTP's patents.

NTP doesn't really want to shut down RIM's operations, since then it wouldn't receive any royalties, said John Rabena, a patent attorney with Sughrue Mion, in an interview earlier this year. However, the injunction does serve as a powerful negotiating tool for a new settlement, he said.

Judge Spencer is expected to rule swiftly on the remaining issues in the case, Wallace said. Should Spencer issue his decisions about the settlement and the PTO review next week, Wallace expects the court to hear arguments about the proposed injunction in December and issue a decision before the end of the year. Earlier this month, Spencer expressed his desire to bring the case to a conclusion, according to reports, which has been interpreted as a sign that he will not stay the case pending the PTO's review.

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