E-mail cowboys can once again shoot from the hip without worry. Research in Motion (RIM), the maker of the BlackBerry, a popular wireless communications device, has settled its patent dispute with NTP. BlackBerry will remain "on the air." On March 3, 2006, RIM agreed to pay $612.5 million to NTP, to end the legal battle that has threatened to halt service and sales of the BlackBerry in the U.S. since 2001. The announcement came after the U.S. District Court Judge James Spencer was expected to issue a final ruling, but instead granted the two companies one last chance to come to an agreement on their own terms.
A federal jury had found in 2003 that RIM had infringed on five patents that were owned by NTP and awarded damages of $53,704,322.69. However, before the settlement occurred, the U.S. Patent Office had rejected three of the disputed patents. Despite the rejections, Judge Spencer had specified that the original ruling of infringement still would stand.
One may wonder why RIM agreed to the settlement of $612.5 million, which is grossly more than the $53 million jury award. Plain and simple, the threat of an injunction would have completely halted service to millions of American consumers and essentially have knocked RIM out of the market. (For more discussion about the practical impact of patent infringement injunctions, see the eBay case report below.)
The morning after the settlement was reached, RIM took out an ad in nationally recognized newspapers, letting everyone know that BlackBerry is here to stay. It also criticized the patent system, as to why it would allow such a "bizarre set of circumstances to threaten millions of American consumers." The lag time between Patent Office review of the validity of patents on reexamination while the patents are being litigated, it argued, is way out of step. It gives patent holders with potentially invalid patents the ability to strong-arm the sellers of technology into settling for huge sums of money in order to avoid a disruption in services, even while the Patent Office's determination is pending. However, the validity of patents is also an issue which the trial court itself may determine independently of the Patent Office. Nevertheless, the attention that this case has received may have an impact in examining possible loopholes in the patent system.
With the focus on litigation, competitors have gained an entry into the market space that RIM once dominated. However, not to worry. RIM is already back on track, acquiring Ascendent Systems, to add software that lets users program their cell, home and business numbers, so that a call to any device is directed to all of them. It appears that the dubbed "CrackBerry" by those who are addicted to it, is only getting stronger and more potent.