The legal chess battle between BlackBerry maker Research In Motion Ltd. and patent-holding company NTP Inc. continues, with new patent rulings from the U.S. Patent and Trademark Office bolstering RIM’s position in the case. The patent office rejected four of the five patents that lie at the heart of NTP’s patent-infringement case against RIM. The office is still reviewing the final patent, and a ruling is expected soon.
The news follows two brief service disruptions that affected an unknown number of RIM’s U.S. BlackBerry customers.
RIM’s stock flashed on the patent office’s announcements, rising from around $74 per share to as high as $81.60 per share Thursday.
“The USPTO’s outright rejection of these NTP patents certainly corroborates RIM’s original contention of invalidity and certainly lessens the arguable value of these patents, but I do not plan to comment on the potential impact of the USPTO’s Office Actions at this time given the ongoing court proceedings,” said Mark Guibert, RIM’s vice president of corporate marketing.
It’s unclear exactly what effect the patent office’s rulings will have on the case. Generally, courts have ignored patent office rulings in ongoing litigation. Further, NTP can appeal the rulings through the patent office and ultimately through the district court-a process that could take years.
“While it does not hurt RIM that the PTO first office actions reject all claims in four of the five NTP patents that are under dispute, it is still not possible to predict that these actions will benefit RIM’s position in the settlement and the case,” wrote UBS analyst Maynard Um in a research note to investors. The firm makes a market in RIM’s securities. “Therefore, the risk of the court ruling for an injunction of the sale of RIM’s products and services in the U.S. remains intact.”
RIM agreed in March to a $450 million payment to settle its years-long court battle with NTP, but the agreement fell apart shortly thereafter. RIM is now asking a U.S. district court to enforce the terms of the settlement. NTP has returned to its request for a court-ordered injunction on the sale of BlackBerrys in the United States.
The court case has served as a drag on RIM’s stock, and those in the industry believe it is affecting the company’s ability to do business.
“For instance, it has hindered the development of (RIM’s) two partner programs, BlackBerry Connect and Built-In,” wrote Ovum analyst Elsa Lion. “Nokia, Siemens, Sony Ericsson and many others have already signed up, but the number of devices shipped is still small.”
And in a final twist to an already complicated issue, RIM has said that it developed a workaround to NTP’s patents. The company said the workaround does not infringe on NTP’s patents, and it can be deployed across all of its devices. RIM has not provided details on the workaround, and has not discussed how it will affect the company’s court battle with NTP.
While the patent office’s rulings assuaged RIM’s investors, two service disruptions tarnished the company’s standing. RIM said its BlackBerry e-mail service went down June 17 and again briefly June 22.
The company said the interruption June 17 affected “some” customers in North America, but it could not provide details. The company said it restored service to the majority of users within two hours that morning, and that voice and text messaging services were not affected. A system configuration change “that did not operate consistent with prior testing” was to blame, RIM said.
The disruption June 22 was a separate issue and caused delays in sending some customers’ e-mails. RIM said it fixed the problem in about an hour. BlackBerry users are not the only ones to suffer service glitches; T-Mobile USA Inc.’s Sidekick users recently suffered similar problems.
RIM is scheduled to report its first-quarter results Wednesday. UBS said it expects the company to post subscriber additions of 590,000, ahead of company predictions. RCR
