RIM and NTP resolve patent litigation

Companies to enter licensing agreement

Research in Motion (RIM), the company behind the BlackBerry wireless e-mail device, has resolved its patent dispute with NTP, the companies announced Wednesday.

As part of the settlement to resolve all legal matters between the companies, NTP and RIM will enter into a licensing agreement, the terms of which will be finalized in upcoming weeks, RIM said in a statement.

In 2002, a jury in the U.S. District Court for the Eastern District of Virginia found that RIM willingly infringed patents held by NTP, an intellectual property holding company in Arlington, Virginia. NTP was incorporated to hold patents obtained by Tom Campana for a wireless communications system he developed for his pager company.

The patents apply not only to the BlackBerry devices, but to the wireless e-mail software that RIM sells to businesses in order to allow mobile users to access their corporate e-mail behind firewalls. The concept is known as "push e-mail," in that corporate e-mail servers push e-mail to wireless devices as that mail arrives, instead of users having to access company networks and retrieve their e-mail in batches.

The lower court also slapped an injunction on sales of the BlackBerry in the U.S., pending an appeal. That appeal was finally decided last December by a judge who agreed with most of the lower court's ruling, but lifted the injunction after ruling that the lower court incorrectly interpreted one of the key claims in NTP's patents.

However, the writing was on the wall for RIM, in that both the lower court and the appeals court agreed that the Canadian company's products infringed upon most of NTP's patents. Last week, RIM's major rival Good Technology Inc. also agreed to license NTP's patents, and Nokia Corp. has also licensed NTP's technology.

RIM, in Waterloo, Ontario, has now agreed to pay NTP US$450 million to settle all pending claims, as well as for a perpetual, fully paid up license going forward, RIM said. RIM does not plan to comment further on the settlement until its fourth-quarter earnings conference call, scheduled for April 5.

The stock market cheered the resolution of RIM's legal problems, sending the company's stock (RIMM) up $13.10, or 19.5 percent, to $80.19 in afternoon trading on the Nasdaq stock exchange.

NTP will now focus on signing licensing deals with other companies involved in the wireless transmission of e-mail messages, said James Wallace, an attorney with Wiley Rein & Fielding LLP in Washington, D.C., representing NTP. He declined to name those companies, but said that NTP expects to make other announcements in a few weeks.

BlackBerry shipments have steadily grown over the past few years, in the face of declining shipments in the broader personal digital assistant (PDA) market. PDA analysts have argued that shipments of unconnected devices will eventually wither as users flock to smart phones or e-mail devices like the BlackBerry.

RIM is a leader in the market for wireless e-mail devices, with 2 million customers, Wallace said. But NTP is eyeing the entire U.S. mobile phone market. As long as a mobile phone wirelessly accesses data that has been formatted as an e-mail message, it is using technology covered by NTP's patents, he said.

"The whole industry is going to push e-mail," Wallace said. "We see this as just the tip of the iceberg."

Copyright © 2005 IDG Communications, Inc.

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