Is a U.S. Shut Out Looming For RIM?

It’s back to a federal district court for Research In Motion after the U.S. Supreme Court denied an emergency appeal of a patent infringement ruling against the maker of the popular BlackBerry wireless e-mail devices.

The high court’s ruling today denied RIM’s emergency motion to stay a federal district court ruling that forces RIM to slug out its patent-infringement case with NTP at the federal district court level.

RIM is fighting off patent infringement claims by NTP that could effectively force it to curtail its wireless e-mail service in the United States, which is by far the Canadian company’s biggest market.

The BlackBerry ranks as among the more popular wireless e-mail devices with corporate and consumer users, so much so that they are often jokingly referred to as “crackberries” because users practically become addicted to them.

In a press statement that suggested RIM was preparing investors for a business hit, RIM said it expects NTP to ask a District Court to enter a new injunction prohibiting the company from providing its BlackBerry service and from using, selling, manufacturing or importing its handhelds and software in the United States.

A spokeswoman for RIM was not immediately available for comment.

Shares of RIM closed up by over 1 percent Wednesday at $58.32 but were sliding in after-hours trading.

The latest twist in the long-running patent battle between the two companies follows a ruling in August that trimmed the number of patent-infringement claims originally won by NTP from 16 to nine against RIM.

“It’s a given that NTP will request an injunction,” said John Rabena, an intellectual property specialist attorney with the law firm of Sughrue Mion. Although a federal district court trimmed NTP’s patent infringement rulings against RIM from 16 to nine, “all it takes is one” for an injunction, he noted.

While RIM maintains that an injunction is inappropriate given the facts of the case and substantial doubts raised subsequent to trial as to the validity of the patents in question, “it ultimately will be up to the courts to decide these matters, and there can never be an assurance of a favorable outcome in any litigation.”

Rabena said RIM could ask a federal district court to enforce a settlement term sheet that the two companies agreed upon, but did not get a court’s blessing.

“A term sheet is not a final settlement agreement, so it’s an uphill battle for RIM there.”

The patent office has rejected some of these patents [by NTP], he added, but that could take years to play out and wouldn’t hold up an injunction.

RIM has argued that it wasn’t aware of NTP’s intellectual property in January 2000 and hadn’t received sufficient proof of the relation of the patents to RIM’s products.

“I think Congress is probably going to get involved with this if it gets close,” Rabena added. “I can’t imagine the BlackBerry network being shut down.”

With RIM’s stock recovering from an initial dip following the ruling, investors appeared to signal they expected a settlement between the two companies in order to avoid a shutdown.

Spokesmen for NTP were unreachable by press time. The company had argued in court filings that RIM was trying to stall the process.

In confirming the high court’s ruling today, RIM said it is still pursuing a larger appeal of the patent infringement case rulings.

“The process by which the Supreme Court will decide whether to hear the case is expected to occur over the next few months. While further review by the Supreme Court is generally uncommon, RIM continues to believe this case raises significant national and international issues warranting further appellate review.”