Lawyers for Research In Motion and patent holder NTP are scheduled to give final arguments later this month before a Virginia judge who could reimpose an injunction on the sales of BlackBerry devices in the U.S. NTP has won several court victories so far, but RIM has prevailed on the U.S. Patent and Trademark Office to call NTP's patents into question.
The case is being closely watched by the tech industry amid calls for patent reform and by anxious BlackBerry users wondering how they'll keep the mobile e-mail flowing in the event of a shutdown. Just to spice things up, RIM claims that it has a "workaround" that could allow it to bypass NTP's patents simply by upgrading its software.
Why might I wake up one day in late March to a dead BlackBerry?
As its patent-infringement defense against NTP winds down, RIM is scheduled to against an injunction on the sale and support of BlackBerry devices in the U.S. After a in 2002, NTP that was stayed in 2003 pending an appeals process.
Various appeals courts have struck down a few portions of that original decision, butand ordered the case returned to the lower court. Since the courts agreed that most of NTP's claims were infringed by RIM, NTP is expected to ask for an injunction. The company has agreed to give RIM's customers to switch to other providers and will allow RIM to continue providing the service to agencies of the U.S. government.
Who or what is NTP?
NTP is a holding company that exists to enforce patents issued to the , who founded NTP with his lawyer, Donald Stout, to capitalize on his inventions. It has signed licensing deals with , , and .
Why does NTP want an injunction?
NTP doesn't make any products or provide any services, so it won't benefit from shutting down RIM in the competitive sense. But the cost that an injunction would pose to RIM, its customers and investors is believed to be so prohibitive that many analysts believe RIM will settle the case rather than risk angering its base.
RIM and NTP tentatively agreed to settle this case last March for $450 million, but the deal fell through. It's believed a new settlement could fetch NTP as much as $1 billion.
Why doesn't RIM just settle the case now?
Several reasons. There's always the possibility the judge might decline to re-impose the injunction, although legal experts won't bet on it given that the appeals court and trial judge have both found that RIM is infringing on NTP's patents. On Wednesday, the Department of Justice weighed in and filed a brief arguing against an injunction, saying that it will be very hard to ensure government access to the service while denying the use of BlackBerry devices to others.
But that could take several years to complete. If RIM settles the case or loses its argument against an injunction before the PTO appeals process runs its course, the company will still be on the hook for damages related to the original trial and for past-due royalties to NTP--even if the patents are later struck down. Sothat it has developed a "workaround" for the NTP patents that it can implement with a software upgrade.
A workaround? How exactly does that work?
Only those engineers who have to make it happen, and their bosses, seem to know for sure. All RIM has said is that the workaround is based on software, and it can be loaded onto new devices. Partners and carriers aren't talking.
Any workaround would have to be far enough away from RIM's current technology that it would to avoid infringing upon the patents, but close enough to not cause a huge upheaval in its service, said Michael Meurer, professor with the Boston University School of Law. This can be tricky.
Would that be enough to get RIM off the hook?
RIM can implement its workaround, iron out bugs and continue to provide its BlackBerry service, but NTP still might be able to come back and sue RIM again, Meurer said. This is known as the "doctrine of equivalents," which means even if the device or software doesn't specifically infringe on the claims of a patents, it can still be argued that the device infringes on the patent in general "if it performs substantially the same function in substantially the same way to obtain the same result," according to a famous patent case known as Graver Tank vs. Linde, which is cited on patent attorney Robert Yarborough's Web site.
NTP's lead counsel, James Wallace of Wiley, Rein & Fielding, said that until RIM reveals the details of the workaround, there's no way to know whether it would be subject to the doctrine of equivalents. It's also possible that RIM might have come up with a workaround that falls outside the scope of the claims, but until lawyers have had a chance to review it, no one knows for sure, Wallace said.
So why doesn't RIM just implement this workaround and get on with it?
Making a massive software change to a reliable wireless networking system is not something that is done lightly. There are bound to be bugs that could do anything from make the BlackBerry system go offline to make individual e-mails disappear. It's a last-resort option.
In fact, RIM made this exact argument in its briefing to Judge James Spencer, arguing against the imposition of an injunction. "Implementing a workaround requires reloading software on servers and BlackBerry handheld devices. This would likely involve some serious effort on behalf of users and their supporting organizations, which will need to take time to implement the upgrades, and will likely experience typical problems experienced with undertaking upgrades," the brief reads.
Presumably, if the workaround is really part of RIM's long-term plans, it has begun testing the software with carriers and major customers. But given the secrecy surrounding the workaround, it's not clear that it's anything more than a smokescreen designed to mollify RIM's investors and customers.
Will RIM's competitors face problems like this?
It's not clear whether any of the other software companies in this market are free of the same patent troubles that have hurt RIM. Good Technology was sued this week by Visto, which asserted Good was infringing on Visto's patents. Good and RIM have sued each other before, claiming patent infringement, but settled a few years ago. Visto is suing Microsoft, claiming Microsoft is infringing on Visto's patents. Visto and Good have each signed a license to NTP's patents, but are now tussling over Visto's patents.
All the companies are doing the same thing: delivering e-mail over a wireless network to mobile devices. Unless there's a broad licensing agreement, it's easy to envision a constant state of litigation in this market for the next several years.