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RIM Sees Daylight in Patent Dispute

Research in Motion said two more of the patents a court ruled that it infringes upon had been rejected. But how long can the Blackberry e-mail device company let this drag on?

On Wednesday, RIM told news organizations that the United States Patent and Trademark Office (USPTO) had rejected two more of the patents it had been found to violate. But the struggle to reach a settlement with NTP, which owns the patents in question, is far from over.

While RIM and NTP slugged it out in court, then tried to settle, the USPTO had begun a re-examination of the patents in question. The patent office already had rejected four of NTP's patents.

But the validity of the NTP patents is far from decided.

"How much it means depends on who you ask," said John Rabena, an attorney speciailizing in intellectual property with the Washington, D.C. law firm of Sughrue Mion. NTP can appeal the patent examiner's decision twice: once before the Patent Appeals Board and again in the Federal Circuit Court. "This could be tied up for another two to four years of appeals," he said.

On June 9, RIM said licensing talks with NTP had broken down, despite the companies' March 16 agreement to settle. RIM agreed to pay $450 million in exchange for NTP granting RIM and its customers an unfettered right to continue its BlackBerry-related wireless business without further trouble. RIM said that because NTP wouldn't finalize the deal, it had asked the federal appeals court to stay the appeal and enforce the agreement.

RIM lost bigtime in the patent infringement suit filed in November 2001 by NTP.

NTP charged RIM's BlackBerry wireless e-mail service infringed seven of its patents. A jury agreed and slammed it with a $23 million judgment, just weeks after RIM signed deals with Nokia , Palm and Handspring. The jury found that some RIM products infringed on NTP's patents on the use of RF wireless communications in electronic mail systems.

In August 2003, a U.S. court ruledfor NTP, ordering RIM to pay $53 million for infringement of five NTP patents.

NTP has another front in the war, Rabena said. It can narrow the claims in its patents. Doing so might wipe out RIM's past infringement -- and the damages awarded -- but it could keep RIM and its partners from operating the business.

"It's more likely that NTP would appeal and continue the appeal process," Rabena said. "They know RIM probably does not want to be tied up in four years of appeals with this hanging over their head."

"It is too early still to predict the end of this lengthy dispute, or indeed a happy ending for RIM," Ovum analyst Elsa Lion said in a research note. In addition, the workaround RIM management boasted about showed its lack of confidence in the outcome of the infringement suit, she added.

"The impact of this case on RIM's business should not be underestimated," Lion continued. Besides shaking investor confidence, the uncertainty has slowed down RIM's partner programs. "In the long term the effects could be disastrous," she said, "if RIM does not finalize a settlement or find a way around all disputed patterns."

RIM's stock chart looks like the Alps, with the price bouncing up and down between a high of $85 in January 2005 to a low of $52.25 in March. Despite the news, RIMM closed down .75 percent to $77.60 at close of Thursday's trading.



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