Supreme Court rules against RIM in BlackBerry battle

The highest court in the U.S. on Monday shot down Research In Motion’s request to review a previous ruling in the high profile patent infringement case against the BlackBerry maker.

RIM had asked the U.S. Supreme Court to review issues concerning the extraterritorial reach of the U.S. patent law.

Monday’s decision was expected by experts following the case, which has dragged on since 2001, when Virginia-based holding company NTP Inc. originally filed suit against RIM in the District Court.

The Supreme Court already has a couple of patent infringement cases before it, such as the MercExchange v. eBay.

“The fact the Supreme Court didn’t hear it is no big surprise,” said Gartner technology analyst Martin Reynolds.

Likewise, Jim Hurst, partner at Chicago-based law firm Winston & Strawn LLP, said nobody really expected the Supreme Court to take this case.

“It’s such a long shot generally,” said Hurst. “There was nothing particular about this case other than its size to suggest that the Supreme Court would be interested.”

The two parties were back in the District Court last week for a simultaneous brief held on remaining issues with a simultaneous reply brief scheduled for Feb. 1. The case was handed back to the District Court after a Federal Circuit decision in August 2005 reversed a previous decision by the District Court in 2002.

The outstanding issues are the final amount of damages, which as of Nov. 30 were estimated at US $240 million, and the injunction. An injunction would bar RIM from servicing BlackBerry devices and from using, selling, manufacturing and importing its handhelds and software in the U.S.

A lawyer for NTP said the decision means its claims are now fully affirmed to be valid and infringed.

“They’ve had multiple opportunities to take a reasonable loyalty license and they’ve refused to do it,” said Jim Wallace, partner at Washington-based law firm Wiley, Rein & Fielding LLP. “Why a company with a good product and a good business would commit suicide is beyond me.”

Following Monday’s court decision, RIM issued a press release. Calls to RIM chairman and co-CEO Jim Balsillie’s office were not returned at press time.

In the release, the Waterloo, Ont.-based company cited several reasons outlining why it thinks an injunction is inappropriate in this case.

These include the Patent Trade Office’s (PTO) recent rejection of three of the four remaining NTP patents in the office’s second readings; the ability to fully compensate NTP through ongoing royalty payments in place of an injunction; the Supreme Court’s decision to hear the appeal in the case of MercExchange v. eBay; and public interest concerns stemming from the suspension or interruption of BlackBerry service in the U.S.

U.S. District Court Judge James R. Spencer, who will make the final decision on RIM’s fate — a hearing date is scheduled to take place next month — has publicly stated, however, that the PTO’s rulings will have no impact on the case whatsoever.

“RIM has had it’s day in court and it’s lost,” said Wallace. “The case is over with.”

Wallace added the fact that the PTO is even looking at the patents at this point is questionable.

“The patent statute says as far as the inter-parties re-examination is concerned, the patent office is not to hold such proceedings,” he said. “The statute says when a litigant goes to trial and loses, he shouldn’t get a second bite at the apple.”

Similarly, Hurst said what’s happening at the PTO has little, if anything, to do with what’s before the Supreme Court.

“The PTO already decided they were going to issue this patent and now they’re taking a fresh look at it after the fact,” said Hurst. “Judge Spencer has the right to ignore what’s going on in the PTO.”

Even if an injunction is issued, RIM has been telling its investor community for months that it is preparing a “software workaround design” to maintain the operation of its BlackBerry device in the U.S.

Gartner’s Reynolds, however, said the injunction that Judge Spencer staid in 2003 specifically forbid RIM from providing e-mail services to its devices.

“If the workaround were to involve supplying e-mail service to BlackBerries then it would not be allowed under the 2003 proposed injunction,” said Reynolds.

Legal experts say this is a common practice by companies that lose a patent case to avoid an injunction. Wallace, said, however, RIM is talking out both sides of its mouth.

“On Jan. 17 RIM said this workaround is not going to be all that acceptable by the customers, it’s not that easy and it might not work,” he said. “It’s different strokes for different folks — tell the investors one thing and tell the court another.”

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