TMCnet News
BlackBerry Patent Dispute Is Settled(Newsbytes Via Thomson Dialog NewsEdge)The maker of BlackBerry wireless e-mail devices agreed yesterday to pay $612.5 million to a McLean firm to resolve a long-running patent dispute and put to rest concerns that the popular gadgets might be shut off. Under the deal, Research in Motion Ltd., the Canadian company that pioneered the BlackBerry service, will license technology to keep it in business and allow it to transmit e-mail that government, emergency services and much of professional Washington have come to rely upon. The case attracted the close scrutiny of business and government leaders, many of whom walk down K Street or Wall Street tapping the palm-size devices. The case also took on special significance to inventors and big businesses, who viewed it as a test of the patent system in the digital age. "It's about time this got settled," said Robert G. Sterne, a Washington patent attorney. "Innovators and BlackBerry users should be pleased because the patent system worked," he said. "Now I'm going to go get a BlackBerry next week, because I've been waiting since last year to get one but didn't because of the case." RIM and the patent holder, NTP Inc., came together on Wednesday after nearly five years of litigation, reaching a truce in New York that NTP characterized as "amicable." In a written statement yesterday, RIM said: "All terms of the agreement have been finalized and the litigation against RIM has been dismissed by a court order." As a result, service for BlackBerry's 3.2 million U.S. subscribers will continue uninterrupted. NTP co-founder Donald E. Stout said he was "tremendously pleased," but declined further comment on the settlement. The other co-founder, Thomas Campana Jr., died in 2004. NTP, a private patent-holding company, would not say how the money will be distributed. Sources close to the talks who spoke on the condition of anonymity because of the confidentiality of the agreement said most of the money will go to Stout and to Campana's estate and the rest will be distributed among NTP's 20 shareholders. The meeting that led to yesterday's deal was prompted by a court hearing last week, during which U.S. District Judge James R. Spencer admonished the parties for not settling the dispute. During that hearing in Richmond, Spencer indicated that he would uphold a 2002 jury decision in NTP's favor, and analysts thought a shutdown order affecting non-government users could have come as soon as next week. By that point, RIM had already exhausted most of its legal options, having lost an appeal in federal court and having been denied a hearing by the Supreme Court. The courts had also denied further delays of a shutdown. But in the meantime, RIM was hoping that a reexamination at the U.S. Patent and Trademark Office would declare NTP's original software and device patents invalid, effectively allowing RIM to question the entire legal underpinning of the case. In the proceedings at the patent office, NTP was losing the major battles. On the morning of Spencer's hearing last week, the agency declared the second of the five litigated patents invalid. With sufficient incentives for both sides to resume negotiations, RIM and NTP officials earlier this week still characterized themselves as being far apart. The companies reached a tentative settlement last spring for $450 million, but that agreement fell apart and the companies continued to spar in public and in court. That prompted much anxiety among some users and information technology managers at companies that rely on BlackBerry communications. After the judge's admonishment last week, NTP and RIM spent much of Monday fighting over negotiating terms. RIM wanted to make sure that any settlement would protect wireless carriers and other relevant parties from further litigation. NTP wanted to secure the right to license its patents to other parties, and to get a nonrefundable payment from RIM. On Wednesday, RIM's attorneys and Stout and his attorneys flew to New York to meet at the offices of Citigroup Global Markets, NTP's banker. On the NTP side, Stout was joined by his attorney, Jim Wallace, and bankers Joseph Mooney and Jerry Cincotta of Citigroup. RIM co-chief executive Jim Balsillie, who last week said he didn't think it was necessary to "pay for patents that are invalid," stayed in contact with company lawyers Ronald Star and Marty Glick by phone during the negotiations, which continued past midnight on Thursday. The deal was signed late yesterday at the legal offices of Skadden, Arps, Slate, Meagher & Flom LLP, RIM's securities attorneys. Patent lawyers said yesterday that they weren't surprised to hear that RIM had settled. "The writing was on the wall," said John M. DiMatteo, an intellectual-property lawyer in New York. "It wasn't a question of 'if.' It was just a question of how much." Intellectual property attorney Donald R. Steinberg said the size of the settlement might spur more lawsuits from patent-holding companies, but that in most cases, a settlement is often desirable because it limits risk on all sides. "There was some risk to NTP that the patents would ultimately be invalidated and then they wouldn't get anything," he said. "And there was risk to RIM that the patents . . . would be upheld and they would be enjoined, and in essence they would have to pay more money to get out of the injunction." Knowing that, many users expected the two sides to settle. "I never thought BlackBerry would ever shut down," said Patrick Heffernan, 36, a Treasury Department director who said he starts and ends each day by checking his BlackBerry. He wasn't surprised by the settlement, because in Washington, he said, BlackBerrys are ubiquitous and he was confident that the companies would make a deal. "I figured that everyone has a price." Officials of companies that rely heavily on the devices were relieved when they heard of the settlement. "This is such great news," said Israel Carunungan, a director at publisher Hanley Wood Magazines, where more than 100 employees use BlackBerrys. "I've been following the case closely because the BlackBerry is so essential for business." |