NTP slaps Palm with patent infringement suit

In a lawsuit filed in U.S. District Court in Virginia on Monday, NTP asserted that Palm's products, services, systems and processes infringe on NTP's patents.

NTP is claiming that Palm infringes on seven of its patents, five of which it successfully proved RIM had violated. Palm's line of Treo smart phones--the Palm VII, Palm i700 and Palm Tungsten--and their associated software applications and services, are each named as infringing on NTP's patents, according to the complaint filed on Monday in the U.S. District Court in the Eastern District of Virginia.

The Palm smart phones and personal digital assistants (PDAs) named above can send and receive e-mail by way of radio frequency to mobile processors, capabilities that NTP has patented, according to the complaint. Because Good Technology, Visto and RIM have licensed the same patents, so should Palm, the complaint argues. NTP also lists Nokia as a license-holder, though that company is not mentioned in the complaint.

NTP is looking for an injunction on the sale of Palm products that allegedly violate its patents, as well as monetary damages. The company has not specified the amount of monetary damages it is seeking.

NTP is a holding company that was formed to pursue intellectual-property cases involving patents held by the late Thomas Campana for a wireless e-mail system. The company settled a multiyear legal ordeal with RIM earlier this year for $612.5 million, after alleging that RIM's BlackBerry devices and wireless e-mail service infringed on NTP's patents.

Seven patents at issue
In a statement released Monday, NTP co-founder Donald E. Stout said the company had tried "on numerous occasions" to resolve the patent issue with Palm before resorting to legal action.

Palm, which saw its shares fall 7.6 percent Monday to close at $14.24, issued a response claiming the lawsuit is "unwarranted" and over "dubious patents."

"All seven of the patents asserted are being re-examined by the U.S. Patent and Trademark Office and have been rejected by the re-examiners as invalid," Palm said in a statement. "The NTP patents disclose a pager-based e-mail service that has nothing in common with the mobile-computing devices invented by Palm."

Palm noted that it has held occasional discussions with NTP regarding licensing the patents. But when the handheld maker last spoke with NTP a number of months ago, the patents were already in the re-examination process with the patent office, Palm said in its statement.

"Palm respects legitimate intellectual property rights, but will defend itself vigorously against the attempted misuse of the patent and judicial systems to extract monetary value for rights to patents that may ultimately have no value at all," Palm said.

NTP sued RIM in 2001 and won a jury verdict in 2002 that RIM's BlackBerry devices and software infringed on NTP's patents. Following that verdict, an injunction was placed on the sale of BlackBerry devices and software in the U.S., but it was stayed during the appeals process. RIM unsuccessfully appealed the verdict, with the U.S. Supreme Court ultimately denying RIM's request to hear the case. Facing the threat of the injunction being reimposed, RIM settled the case in early March of this year.

The new lawsuit will once again raise questions about the validity of NTP's patents. The U.S. Patent and Trademark Office re-examined them earlier this year and issued final rejection notices on two of the patents in question, essentially invalidating the claims made by those patents. NTP planned to appeal that decision in a process that was expected to take months or years, but it's not clear where that appeals process stands, as of Monday.

Despite the uncertainty around the patents, RIM decided to settle the case after realizing that its legal saga was hurting BlackBerry sales.

The timing of the new suit, the day before Election Day, will also likely invigorate discussion around patent reform, which has been a major issue in Washington and Europe for two years. There has been no shortage of vitriol and hyperbole around the issue. Large companies say they are being besieged with lawsuits. Small inventors, however, say that large companies merely want to steal their inventions.

The term "patent troll" has become a well-known, emotionally laden phrase, though the definitions of who is and who isn't a patent troll vary wildly. As one lawyer put it, a patent troll is usually "the other guy."

Many companies, such as Hewlett-Packard and IBM, have interests on both sides of the issue. The two companies have loudly complained about the spread of litigation, while increasing their own efforts to garner more royalties from their patent portfolios. All sides have been able to make fairly convincing arguments for their opinions; as a result, reform efforts have been difficult to devise.

Two factors make patent cases particularly aggravating for many: First, the pervasive reach of the tech industry means that a single patent can entitle the patent holder to hundreds of millions in royalties. Second, most defendants don't intentionally infringe on a third party's patents.

The contents of patent filings are confidential, initially. Thus, a company can develop a product and then find out years later that they infringed on a patent that they had no knowledge of when they first planned their products.

CNET News.com's Erica Ogg contributed to this report.