Report: NTP offers RIM a deal at 5.7 percent of revenue

RIM executive confirmed the companies talked recently in front of a court-appointed mediator

NTP Inc. has offered Research in Motion Ltd. (RIM) a new settlement deal that asks for 5.7 percent of RIM's future revenue from U.S. BlackBerry sales, the Wall Street Journal reported Friday, citing an unnamed source.

The two companies announced a $450 million settlement deal earlier this year in their dispute over whether RIM's BlackBerry handhelds and wireless e-mail system infringes upon patents held by NTP. However, that settlement collapsed in June, setting up court hearings that could lead to the reimposition of an injunction on sales of the BlackBerry in the U.S.

A RIM executive confirmed Thursday that the companies have been in talks recently in front of a court-appointed mediator, but did not comment on the substance of those talks. NTP's lead counsel Thursday declined to comment on any talks between the two companies.

Television business news channel CNBC reported Friday that NTP co-founder Don Stout received a settlement offer from RIM Thursday night, but that NTP considered it "unacceptable."

Representatives from NTP and RIM did not return calls seeking comment on Friday.

RIM's fiscal 2005 revenue was $1.35 billion, $914 million of which was garnered from U.S. BlackBerry users, according to the company's fiscal 2005 annual report. If the 5.7 percent figure is accurate, NTP would have earned $52.1 million during RIM's 2005 fiscal year, which ended on Feb. 26.

However, RIM's business is growing as the BlackBerry handhelds become a fixture among corporate executives. The $450 million settlement announced in January was for a perpetual license to NTP's patents, rather than an ongoing royalty. CNBC reported Friday that the new settlement talks also involve a fixed lump-sum payment, in addition to the 5.7 percent royalty rate, citing their own unnamed source.

Few legal analysts believe RIM will risk letting the U.S. District Court for the Eastern District of Virginia impose an injunction on BlackBerry sales that could shut down the service, and a new settlement has been widely expected.

Investors pushed RIM's stock (RIMM) up $3.38, or 5.56 percent, to close at $64.13 on the Nasdaq stock market Friday, on reports of a possible settlement.

Copyright © 2005 IDG Communications, Inc.