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TECHNOLOGY - BLACKBERRY LAWSUIT

 

 

Dark days for BlackBerry

Makers of the BlackBerry face a losing patent battle. Services may be shut down in the US. The US government is worried.

BY A CORRESPONDENT
12th November, 2005

The cute little BlackBerry, the revolutionary portable email device is under threat. Research in Motion, (RIM) the Canadian company which manufactures it is facing the dire prospect of its US sales and services being shut down, as a lawsuit on its patent rights nears end.

The tiny BlackBerrys, whose popularity in the US is next only to the iPod, are used extensively in the US, which is its biggest market. However, that market may soon dry up, practically killing the golden goose for Research in Motion.

In 2001, US firm NTP claimed the patent rights for BlackBerry manufactured by RIM. A Virginina court ruled in favour of NTP the next year. In 2003, Judge James Spencer ordered an injunction to shut down BlackBerry services, but stayed the order to enable an appeal by RIM. The Appeals Court scaled down Spencer's ruling, but upheld the part about patent violations.

Following this, NTP and RIM reached an understanding for an out-of-court settlement. The two companies agreed for a cash settlement at $450 million, which is dragging on in the courts now. NTP says that the terms of the settlement were never finalised, but RIM says the terms are final. The case has landed up before Spencer's court again.

The judge has already expressed his displeasure about the Blackberry case dragging on and on, even saying that "NTP and RIM have already taken up enough of my work and time." He has indicated that he wants to wind up the case quick, even before the Patent Office finalises a review of the case. Spencer says that his only concern is to rule on the validity of the NTP-RIM settlement.

If the settlement is found to be fine, RIM gets to make and sell BlackBerrys in the US after coughing up $450 million. If the agreement is not valid, Spencer can switch off BlackBerrys in the US.

The move has obviously got the US government worried. On Thursday, November 10, the US government Justice Department filed a petition before the court, to ensure that US federal government employees using BlackBerrys are not impacted by an adverse judgment. The government fear is understandable, since one in ten BlackBerry users in the US is a federal government staffer, who uses the device to stay in touch while out of office.

However, NTP says that the government's fear is baseless, saying it will ensure that services to government staffers are not disrupted if the ruling goes in its favour. The government doubts it.

It is rumoured that to keep its best-selling product going, RIM may settle for anywhere between $600 million to $1 billion in a peace deal with NTP. However, there are two potential roadblocks to this. One, the cash payment will drain RIM of all its resources. Second, a deal involving huge cash outgo may trigger shareholder lawsuits, which may snowball into a class action case. The reason is, the RIM stock had gone up post the disputed settlement. Now, the stock will surely take a beating, if RIM loses the case. Either way, it is a rocky road ahead for the cute little device, which made email-on-the-go a dream in the US and many countries across the world.

BY A CORRESPONDENT

 

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