Shutdown Showdown For RIM

Friday, Feb. 24th is D-Day for Research in Motion (RIM), with the fate of its U.S. Blackberry wireless e-mail service hanging in the balance.

After years of appeals following a patent infringement verdict against RIM by Virginia patent-holding firm NTP, U.S. District Judge James Spencer is scheduled to begin penalty deliberations against the Canadian-based RIM, including a possible shutdown of the service.

Spencer ordered an injunction in 2003 after a jury found RIM guilty of patent infringement, but he delayed the order until RIM exhausted its appeals.

RIM is facing the possibility of plunging its approximately 3 million U.S. users into the dark on the service.

If Spencer orders an injunction, it is likely the court would give RIM up to 90 days to make arrangements for the injunction and for users to find another wireless e-mail service.

NTP has said in the past it would ask the court to not extend the injunction to government workers, but a BlackBerry shutdown could affect scores of contractors who do business with the government.

However, all is not gloom and doom for RIM, beginning with the fact that Spencer is not obligated to impose an injunction.

And on Wednesday, the U.S. Patent and Trademark Office (USPTO) officially rejected all of NTP’s patent claims against RIM. The decision, according to RIM, effectively nullifies any future appeals to the USPTO by NTP.

NTP said Thursday RIM was “mischaracterizing” the USPTO ruling.

“The courts have consistently, and repeatedly, rejected RIM’s assertions regarding invalidity,” NTP said in a statement. “With the Supreme Court’s January refusal to hear RIM’s request for review, the issue is not whether NTP’s patent claims are valid — they are. The issue is what is the proper compensation for RIM’s use of those patents.

“Unfortunately, RIM refuses to accept the Supreme Court’s decision as the final word.”

The statement added, “Since the federal court system has the final ‘say’ in the matter, RIM’s assertions that the patents have been invalidated are flatly wrong. The validity of the patents is not affected by preliminary PTO office actions.”

The possibility of a U.S. shutdown of BlackBerry services has a lot of companies worried since a national injunction would leave little time for alternative plans.

But a surprisingly small number of companies have actually switched from RIM to an alternative messaging platform said Todd Kort, a principal analyst at Gartner and co-author of a recent report on the RIM-NTP case.

According to Kort, four of approximately 80 companies have made the switch to an alternative platform.

Kort said cost, which may run as high as $1,000 per device, is one reason companies may be holding off. Another is the issues associated with retraining and familiarizing users with a new device.

This may be the biggest concern, said Kort, referring to this as the “Crackberry” effect.

“There are plenty of other push-e-mail solutions out there, but I would say 75 percent of BlackBerry users look at other devices and don’t find any of them particularly attractive,” Kort said.

Even if users are not yet jumping ship, they are upset that RIM has taken so long to reach a solution with NTP.

“They are just really frustrated over RIM’s seemingly cavalier attitude about their concerns and their needs,” said Terry Austin, director of worldwide marketing for competitor Good Technology.

Good Technology has been approached by a large number of companies asking about installing alternative servers in BlackBerry environments. A number of these companies have also opted for a 45-day trial of GoodLink, said Austin.

“The biggest thing an enterprise wants is certainty, and they just can’t deal with this level of uncertainty.”

Roy Mark contributed to this report.

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