The legal options for Research In Motion Ltd. continued to dwindle last week as the U.S. Supreme Court declined to hear its case against patent holder NTP Inc.
The high court rejected a request from the Waterloo, Ontario-based BlackBerry-maker to review whether U.S. patent laws apply to foreign companies doing business in America. The court made no comment in leaving the legal battle to lower courts.
The move continues a courtroom losing streak for RIM, which is facing an injunction that could kill service to U.S. BlackBerry users. A Virginia U.S. District Court in 2003 ordered RIM to pay NTP an 8.55-percent royalty on BlackBerry sales after it found the Canadian developer infringed on NTP’s patents.
The companies agreed to a $450 million buyout last year only to have the settlement collapse.
NTP said the Supreme Court decision “closed the final path for RIM to avoid liability” in the case, and RIM may indeed be forced to pay hundreds of millions to settle the matter. Analysts speculate a settlement could cost as much as $1.5 billion.
But RIM is hoping the case stalls long enough for the U.S. Patent & Trademark office to complete a review of NTP’s patents that could nullify the case. The patent office has already rejected all five NTP claims at the heart of the matter on a “non-final” basis, and has publicly stepped up its efforts to deliver a final decision.
NTP has until Feb. 28 to prove to the USPTO that its patents are justified or risk ultimate rejections on all five patents.
Both companies are scheduled to appear Feb. 24 in front of the U.S. District Court to consider the shutdown of RIM’s service.
RIM, which could appeal such a move, has said it has developed a software “workaround” that would allow it to continue to provide service in the event of a shutdown. But the workaround itself could violate NTP’s patents, and RIM has declined to disclose details of the ersatz technology, leading some to believe it may not yet be functional.
While a shutdown of BlackBerry service would have an adverse effect on U.S. businesses, most analysts believe such a move is highly unlikely. Even if the court were to enforce the injunction, it could issue a stay allowing RIM to continue service until the patent office could complete its review.
“Because the workaround is an option, we think the likelihood that the BlackBerry service is shut down in the U.S. remains extremely low,” The Goldman Sachs Group Inc. wrote in a research note. “We believe recent developments at the patent office have now significantly reduced the probability that RIM will seek to settle with NTP until the PTO issues final rulings on the five key patents.”
