Article

BlackBerry dodges blackout bullet for now

Andrew R. Hickey, News Writer

There was no crying in the streets. No looting. No blank-faced executives thumbing useless devices in a desperate attempt to send or receive just one last e-mail.

After months of speculation and preparation, it appears BlackBerrys in the U.S. will not be squished. At least not yet.

Today, U.S. District Court Judge James Spencer declined to enforce an immediate injunction that would have blacked out BlackBerry service nationwide. The ruling is a small victory for BlackBerry maker Research In Motion Ltd. (RIM) in the vexing patent infringement suit filed more than four years ago by NTP Inc.

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RIM vs. NTP

Here's what's happened leading to Friday's court date:

Nov. 13, 2001: NTP Inc. files a patent infringement suit against RIM in federal court.

Nov. 21, 2002: A federal jury sides with NTP, awarding the company $23.1 million in damages. That figure is based on 5.7% of RIM's sales.

May 23, 2003: U.S. District Court Judge James Spencer raises the royalty rate for NTP to 8.55%. Spencer also issues an injunction that could shut down BlackBerry in the U.S. The injunction is stayed as RIM appeals.

Dec. 14, 2004: The U.S. Appeals Court sides mostly with the lower court.  

March 16, 2005: RIM agrees to pay NTP a settlement worth $450 million.  

Sept. 28, 2005: The U.S. Patent and Trademark Office rejects the five patents at the heart of NTP's suit against RIM.

Oct. 21, 2005: The appeals court denies a motion by RIM to delay the case.  

Oct. 26, 2005: The U.S. Supreme Court denies RIM's motion for a delay.

Nov. 30, 2005: Judge Spencer rejects the $450 million settlement. NTP asks for an injunction that would halt BlackBerry sales and service in the U.S.  

Dec. 7, 2005: Research and advisory firm, Gartner Inc., tells clients not to deploy BlackBerry and to look at alternatives.  

Jan. 23, 2006: The Supreme Court refuses to hear RIM's appeal.  

Feb. 9, 2006: RIM announces that it has designed and tested workaround software that can be installed in the event of a BlackBerry blackout. The company claims the workaround does not violate any of NTP's patents.  

Feb. 24, 2006: Judge Spencer hears arguments from both sides and delays his decision on the injunction, saying he will rule "as soon as reasonably possible."

Spencer, however, issued a stern warning to RIM, telling the company that it did infringe on NTP's patents and a ruling on the injunction would come soon. Some experts said they expect Spencer to rule on the injunction next week.

"This is like sudden death overtime. Starting on Monday, the Court could announce its findings at any point, and there could be an immediate imposition of the injunction. Or things could go the other way, or they could drag on for several more weeks," said Daniel Taylor, managing director of the Mobile Enterprise Alliance.

NTP's suit claims that RIM wrongfully used a number of patents that NTP held to design its widely popular mobile push e-mail service.

And while both companies were battling in a Virginia courtroom, the U.S. Patent and Trademark Office (USPTO) issued another final rejection of one of NTP's patents, which are at the heart of the company's suit. All of the disputed patents have been preliminarily rejected by the USPTO, but on Wednesday the USPTO issued a final rejection of one of the disputed patents. Yesterday, it threw out a second patent. The USPTO is still mulling over the remaining contested patents.

Virginia-based NTP won an injunction to shut down BlackBerry in 2003, but the judge postponed action and allowed RIM to appeal. Yesterday, Spencer decided not to enforce the injunction immediately.

"I'm not surprised the judge didn't issue an immediate injunction," said Jack Gold, founder and principal of Northborough, Mass.-based research firm J.Gold Associates. Gold said it will take Spencer time to render a final decision. "There's no way to know what this really means."

Gold said a decision could take anywhere from weeks to months. His advice: "Stay tuned."

The two companies had initially agreed on a $450 million settlement, but that deal fell apart late last year. Some analysts and experts have suggested that NTP could seek a settlement for more than $1 billion. The case could be settled before it goes back before Spencer.

In the U.S., roughly 3 million people use BlackBerry. Of those, 1.8 million are enterprise users, while 1.1 million work for small businesses, in home offices, in small offices or are self-employed. The remaining 100,000 are strictly personal users, who do not use BlackBerry for any business purposes.

Spencer's decision to not immediately pull the plug sparked a sigh of relief among BlackBerry users, who, through their almost addictive behavior, have earned the devices the nickname "CrackBerry."

Matt Wilson, OEM sales manager for Trapeze Networks, said it's back to business as usual after BlackBerry dodged the blackout bullet. He had been scouting BlackBerry alternatives, but none really compared. Knowing that his "simple and elegant" BlackBerry will continue to operate was a relief, Wilson said.

"BlackBerry is so good," he said. "It just gives you what you need."

If Spencer had blacked out BlackBerry, Wilson said it would take "two weeks before people start really freaking out." It would "be ugly," he added.

"I'd start looking at the [Palm] Treo device …," Wilson said. "I think I'd be fine tomorrow, but come mid-morning Monday I would be concerned that I'm not getting my e-mail."

And Wilson isn't alone.

A survey released this week by Waltham, Mass.-based Pyxis Mobile, a financial services wireless software provider, found 81% of asset managers polled consider BlackBerry "critical or vital to their business." Seventy-eight percent said they are actively conducting contingency plans in case of a BlackBerry service disruption, however, 75% said if the patent infringement suit were fully resolved they would stop exploring alternatives. As an illustration of RIM users' loyalty, 85% of respondents said they are either more likely to deploy BlackBerry, or their BlackBerry purchasing plans have gone unchanged since six months ago.

Just yesterday, with less than 24 hours before RIM was due in court, RIM co-CEO Jim Balsillie exuded confidence during a Webcasted speech from the RBC Capital Markets Communications, Media and Technology Conference in British Columbia. Balsillie contended that RIM would come out victorious and called NTP's claims "ridiculous" and "crazy."

"All [NTP is] trying to do is jig a timing game, because these patents will go in the garbage," he said. "Like the chance of them surviving is zero. Like, they're gone."

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"These patents are going to die," Balsillie added later, saying the only outstanding question is, "Is there a timing equation where we have to put in a workaround or not?"

And Balsillie stood by the workaround, though for now it is unnecessary.

"We've got dozens of customers using it," he said yesterday. "We haven't had one complaint."


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