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
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
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
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 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