RIM loses NTP settlement fight

A lawyer for NTP Inc. said Wednesday the holding firm will seek to re-confirm an earlier injunction and collect approximately US$240 million in damages following a U.S. court decision that struck down both of Research In Motion’s attempts to stay proceedings and enforce a settlement.

“This is just like any other patent infringement case,” said NTP attorney Jim Wallace, partner at Washington law firm Wiley, Rein & Fielding. “We know what the damages are. We would say we want that money plus our injunction.”

The United States District Court for the Eastern District of Virginia denied RIM’s motion to stay further proceedings until the U.S. Patent and & Trademark Office (PTO) reaches a final decision on NTP’s patent claims. Earlier this fall the PTO rejected all claims of remaining NTP patents upon first review — a common move by the office, according to legal experts.

In a second ruling, the Court denied RIM’s request to enforce a US $450 million settlement reached earlier this year in March, citing the parties “do not have a valid and enforceable settlement agreement.”

Market Regulation Services announced a trading halt on RIM’s stock on the Toronto Stock Exchange just before the news broke on Wednesday.

NTP originally filed suit against RIM in the District Court on November 13, 2001, alleging that several dozen system and method claims from its patents-in-suit had been infringed by RIM’s BlackBerry and wireless e-mail devices and services. The Court ruled in NTP’s favour on August 5, 2003, entering a permanent injunction against RIM, which was stayed pending RIM’s appeal to the United States Court of Appeals for the Federal Circuit.

Other details of the settlement were not disclosed to the public and filed “under seal” by the District Court. The decision, handed down by United States District Judge James R. Spencer, could potentially jeopardize the future of RIM’s popular BlackBerry device in the U.S. market, which accounts for 70 per cent of its business. Judge Spencer was not available for further comment.

The District Court wrote in the order that it is in the process of setting up a briefing schedule and hearing date to settle outstanding issues. While it hasn’t been made official yet, Wallace believes the date will likely occur in the next two to three weeks, with a decision two weeks thereafter. A new injunction would prohibit RIM from servicing BlackBerries and from using, selling, manufacturing or importing its handhelds and software in the U.S.

A spokeswoman for RIM said the company would not make any further comments at press time. RIM did, however, issue a press release following the ruling. In it the company outlined several reasons why it deems an injunction inappropriate at this time. These include its request for the U.S. Supreme Court to review a previous ruling by the U.S. Court of Appeals for the Federal Circuit. The Federal Circuit in August turned down RIM’s request to have its case reheard “en banc,” or before all 12 judges.

The Supreme Court, however, already has a couple of patent infringement cases before it such as the MercExchange v. eBay, making it unlikely it will take on another one, said Wallace.

“The Supreme Court only takes 70 cases a year of all types,” said Wallace. “The idea that they would take two or three patent cases in one term that’s a real long-shot unless the new Chief Justice is a patent nut, which I don’t think he is.”

RIM also cited “public interest concerns” around potential suspension or interruption of BlackBerry service in the U.S. Wallace, however, maintained NTP’s position that government users of BlackBerry devices would, under law, be able to continue using them. Wallace also said NTP attorneys have recommended to the Court that there be a 30-day grace period to give BlackBerry users time to buy alternative technology.

The statement also repeated what RIM chairman and CEO Jim Ballisie has said earlier: that RIM has been “preparing software workaround designs” that it intends to implement to maintain the operation of BlackBerry services in the U.S.

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