The BlackBerry settlement and possibilities for patent reform

The long running patent infringement dispute between Research in Motion (RIM), the makers of BlackBerry and NTP Inc has settled for $612.5 million US dollars.

 NTP argued that RIM infringed its patents to run its popular BlackBerry personal communication devices. The infringement action has now been dismissed and the companies have announced a signed agreement under which RIM has paid NTP $612.5 million, including a license on the disputed patents. It also covers claims that NTP may have had against RIM’s partners or third party sellers and providers of RIM products and services.

According to reports, RIM was persuaded to settle because of the detrimental effect the dispute was having on sales of the handset. In 2002 a jury awarded NTP around $100 million in damages for the actual patent violation, over $500 million less than the figure eventually awarded. A US Patent and Trademark Office (USPTO) re-examination of the patents involved in the dispute will continue despite the settlement. However, the final result of any examination, which can take years to complete will have no direct effect on the settlement.

The case has brought to light a fundamental problem with the patent system in the US. Once patents are issued, the impact of litigation costs on a company often leads to the defendant settling the claim even though their patent is infringed. The debate surrounding patent reform has been ongoing. It is common practice in the US to file for patents on the functions of software. Critics arguing for patent reform often point to the fact that over 90 per cent of the disputed patents end up being invalidated because of prior art. This indicates a genuine lack of research into patents.

Legislators are wary of the fact that calls for reform leave pharmaceutical industry unprotected. This could lead to the separate treatment of pharmaceutical and software patents. Brad Smith of Microsoft Corp. commented: “One lasting impact of the case is that it has turned patent litigation from simply a legal issue into a broader business, commercial and even an economic issue.”

In general, legislation currently requires a judge to immediately issue a permanent injunction once infringement of a valid patent has been determined. This issue will come before the Supreme Court of March 29th in a case that Mercexchange filed against eBay. The dispute surrounds the patented “buy it now” technology that allows a seller to set a price at which it would be willing to immediately sell the item. If the Court rules in eBay’s favour, this would alleviate some of the problems in the patent system, granting the company time to have the disputed patent re-examined and possibly invalidated.

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