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Will Court Order BlackBerry Shutdown Today?
[February 24, 2006]

Will Court Order BlackBerry Shutdown Today?

TMCnet Associate Editor

Judge James Spencer might decide to shut down Research in Motion’s BlackBerry service in the U.S. during a hearing scheduled for today in federal court in Virginia.

However, should Judge Spencer decide in favor of patent holding company NTP’s request for an injunction, it’s not likely that the service will actually be shut down. Legal experts say its possible RIM will settle at the last minute, which would put an end to the years-long legal battle – or, more likely, the company will institute its “workaround solution;” new software which will allow the wireless email service to continue to operate, but which does not infringe upon NTP’s patents.

Meanwhile, the U.S. Patent and Trademark Office on Wednesday rejected one of the five patents held by NTP relating to the case as part of a reexamination of those patents. According to published reports, the Patent Office is likely to reject the other four patents, however, NTP can appeal those decisions.

There has been speculation that this recent action has thrown a monkey wrench into Judge Spencer’s decision making process. According to published reports, he has become increasingly impatient with the case, and has said that he wishes to see it dispensed with. However, he told Reuters yesterday that he views the Patent Office’s decision as a separate action and one which currently has no bearing on the decision at hand.

Should the Patent Office ultimately decide to invalidate NTP’s patents, that would effectively put an end to the case. But because the appeals process takes up to a year, it’s unlikely that will happen before Judge Spencer issues a ruling - and he has indicated that he does not want to wait.

RIM Co-CEO Jim Balsillie was quoted by Reuters on Thursday saying that NTP is now trying to “jig a timing game, because these patents will go in the garbage. The chance of them surviving is zero. Like, they’re gone.”

NTP successfully sued RIM for patent infringement in 2002, however, RIM brought the case to the U.S. Court of Appeals, which upheld the decision in 2004. The two companies reached a settlement agreement last year, but then NTP backed out of that agreement and requested a larger percentage of RIM’s revenues. That landed the two companies back in court.

One issue which Judge Spencer might take into consideration is the impact of a BlackBerry shutdown on the U.S. government and the economy. The BlackBerry is used by more than 3 million people in the U.S. – including hundreds of thousands of government workers and corporate executives, many of whom claim they depend on the wireless email device to carry out their day-to-day business. NTP has said it would exclude government workers from an injunction, but the U.S. Justice Department has voiced concerns over the feasibility of a partial shutdown.

Judge Spencer is reportedly allowing the Justice Department to appear at today’s hearing, but has denied a request from the government to introduce new evidence (which more than likely would attempt to show the negative impact a shutdown would have on government operations).

Ben Bollin, an analyst at FTN Midwest Research, said in a report on CNNMoney that he expects settlement terms to now fall below the initial $450 million agreement the two companies reached last year. That’s less than half the $1 billion payment he was predicting earlier this year.

RIM told Reuters on Thursday that the settlement it was originally offered by NTP would not have allowed it to continue operations.

“When they took their final position on here’s what we’ll do, it wasn’t about money, they wouldn’t give us terms that would allow us to carry on our business,” Balsillie told Reuters. “We took it to an outside licensing counsel and they said we’d be crazy to take these terms.”

NTP has reportedly offered a license that protects RIM’s customers, carriers and partners.

“NTP put this in its January 17, 2006 public court filings so that everyone can see for themselves how it protects everyone,” NTP attorney Kevin Anderson said in a statement to Reuters. “NTP just wants global peace between the parties.”

Although the hearing is today, it is possible that Judge Spender won’t make a decision until later next week.

Patrick Barnard is Associate Editor for TMCnet and a columnist covering the telecom industry. To see more of his articles, please visit Patrick Barnard’s columnist page.

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