RIM Struggle to Settle Blackberry Patent Dispute

Research in Motion has recently learnt that its settlement in March with NTP Inc over the Blackberry was in fact invalid. RIM has suffered a serious setback to its defence to patent infringement.

The US District Court for the District of Eastern Virginia refused to allow further delays in the court proceedings by waiting for a decision over the validity of the patent by the United States Patent and Trademark Office. The USPTO could take up to 10 years before concluding a final decision.

The potential of the litigation is that RIM may be prevented from selling or running Blackberries in the United States.

The court action began in November 2001, where NTP alleged that RIM had infringed its patents which cover a method using radio frequency wireless communications in email systems. NTP convinced the jury in November 2002 that its patent was infringed and was subsequently awarded damages of $53.7 million and an injunction to prevent RIM from selling the blackberry. However, the injunction was stayed pending an appeal.Â

The Court of Appeals ruled that RIM’s Blackberry did infringe NTP’s patent but that the definitions used by the lower court needed clarification. The injunction was lifted and the Court of Appeals referred the case back to the District Court over 5 claims of the patent. Â

Both firms subsequently settled the case in March 2004 for $450 million whereby RIM would receive the right to continue using its BlackBerry wireless business.Â

The agreement was very short and only consisted of a page and a half stating that the companies would continue to negotiate to finalise the terms of the licence with an eventual settlement agreement. However, the parties were in dispute over the scope of the agreement. RIM subsequently asked the Court to enforce the agreement.

RIM also appealed the Appeal Court ruling however the Supreme Court refused to rehear the case and sent it back down to the District Court. RIM also sought a re-examination of the patent by the USPTO. This examination is in process (and looks like it is moving to favour RIM).Â

However, unfortunately for RIM, Judge Spencer rules that the case in the Court will not be stayed pending a decision by the USPTO.

He wrote:

“Valid patents would be rendered meaningless if an infringing party were allowed to circumvent the patents’ enforcement by incessantly delaying and prolonging court proceedings, which have already resulted in a finding of infringement,”

A second blow for RIM was that Judge Spencer held that the Term Sheet was unenforceable. Â

It is likely that RIM will make another attempt to settle the dispute. Â RIM is also facing disputes over its BlackBerry patent at both the UK and German courts. The High Court of England and Wales is hearing the case this week, whereas the German Court will hear the case in January.

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