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Appeals court: RIM violated patents

Court affirms patent infringement but reverses injunction in case over the BlackBerry service.

Richard Shim Staff Writer, CNET News.com
Richard Shim
writes about gadgets big and small.
Richard Shim
3 min read
A federal appeals court affirmed that Research In Motion has infringed on holding company NTP's patents but can continue selling its products in the United States pending a district court's decision.

In a decision handed down late Tuesday morning, the U.S. Court of Appeals for the Federal Circuit in Washington, D.C., reversed an injunction from a Richmond, Va., trial court's decision and passed the case back to the district court.

"The judgment and the injunction are vacated, and the case is remanded to the district court for further proceedings," the court said in its decision. "We also conclude that the district court correctly found infringement."

RIM declined to comment for this story. Analysts, however, see the court's decision as a mixed bag.

"The decision has bought RIM some time," said Pablo Perez-Fernandez, a research analyst at Stanford Financial Group. "The decision is somewhat positive for RIM because it has postponed a final decision, and they can continue selling products unimpeded."

However, the decision is also a matter of semantics, according to Perez-Fernandez. The district court will determine if errors in the case claim swayed previous decisions--and if not, how much RIM will pay in damages.

Five claims remain in question, and a possible injunction still looms in the event that the district court sides with NTP. The appeals court ruled in favor of NTP on 11 other claims.

"The decision was virtually a total victory for NTP," said Chris Renk, a patent attorney with Banner & Witcoff in Chicago. The big if is the significance of the remaining claims, which may be of "little solace" to RIM if the district court finds they had no impact on previous rulings, Renk said.

Any injunction against RIM would lock the Waterloo, Ontario-based company out of North America, its largest market.

Postmortem victory?
Thomas Campana, the main NTP inventor of the patents in question in the RIM case, passed away on June 8, a day after RIM's appeal got underway.

"We're happy to see the court validate Mr. Campana's technology by affirming the infringement of most claims, and we're confident we'll win the remainder of the claims," said Kevin Anderson, an attorney for NTP. "It's unfortunate he isn't here to see this."

Investors seemed unsure how to react to the ruling, which, while giving RIM some hope, dealt the company a blow with its affirmation of patent infringement.

Upon the decision's release Tuesday, RIM shares shot up almost $9 per share, or about 10 percent, to $98.81. Shares then dipped back down before Nasdaq halted trading. When trading resumed in the afternoon, shares were down $3.59, or about 4 percent, to $86.50.

RIM's BlackBerry devices and messaging service allow individuals wireless always-on access to e-mail and corporate data on portable devices.

The companies have been embroiled in a patent infringement case for a number of years. NTP claims that RIM violates its patents covering the use of radio frequency wireless communications in e-mail systems.

The appeals court heard oral arguments from both companies' attorneys on June 7. A district court judge and a jury had previously ruled in favor of NTP on two separate occasions.

RIM appealed the validity of NTP's patents but not royalty terms or an injunction preventing the BlackBerry company from making, using or offering to sell handhelds, services or software in the United States. The injunction was stayed following appeal.

A federal jury determined in late 2002 that Research In Motion infringed on NTP patents and ordered RIM to pay $23 million to the holding company. RIM appealed the decision.

NTP again won in 2002, this time in a ruling by a district court judge who awarded NTP $53.7 million.

An injunction was also granted to NTP preventing RIM from making, using or offering to sell handhelds, services or software in the United States. The injunction will remain in effect until the date of expiration of NTP's patents, the latest of which is May 20, 2012. The court then stayed that injunction, pending an appeal of the validity of NTP's patents by the Canadian company.

RIM has also been seeking a re-examination of NTP's patents by the U.S. Patent and Trademark Office. A decision is pending.

The United States is RIM's largest market, but the monetary award didn't stop the company's momentum here. RIM has announced several consecutive quarters of profitability, raised almost $1 billion in cash and signed up over 2 million subscribers to its always-on e-mail service.