March 7, 2006 4:00 AM PST

For NTP, is there life after RIM?

What would you do with $612.5 million?

If you're NTP, first you have to pay your lawyers for grinding out a settlement in the five-year patent dispute with Research In Motion over the BlackBerry mobile e-mail device.

Once that's done, the patent-holding company founded by Don Stout and the late Tom Campana will be sitting on a sizable war chest that could come in handy as it attempts to appeal its recent defeats at the U.S. Patent and Trademark Office and looks over the rest of the wireless e-mail market.

After that, there's a chance NTP will use its hefty arsenal to go after other companies. The most prominent name bandied about on "who's next for NTP" lists is the tech industry's wealthiest company, Microsoft--though such a lawsuit seems a bit farfetched to tech analysts and legal experts.

But speculating about new lawsuit targets could be a moot point if NTP doesn't hold on to its patents.

NTP is expected to pursue appeals of the final rejections levied by the USPTO on the patents at issue in the RIM trial. RIM made that process irrelevant, at least in the companies' dispute, when it agreed to hand over $612.5 million last Friday and take a perpetual license to NTP's patents.

NTP won't have to pay RIM back if it loses its appeals with a USPTO appeals board and the federal circuit courts and the patents are struck down, RIM co-CEO Jim Balsillie confirmed during a conference call on Friday. But NTP would lose the right to seek future damages and would probably lose its existing licensing deals if its patents are eventually invalidated. Some legal experts believe ongoing royalties only have to be paid as long as the patents are considered valid.

Void the patents, the theory goes, and the royalties go away.

"Their first job is to go to work on the patent office," said Martin Reynolds, an analyst with Gartner. NTP can ask the patent re-examiner to amend some of the claims in its patents to make them more specific and avoid the prior art that is the cause of their current troubles, he said. The claims in NTP's patents have been rejected in large part due to the existence of prior art, or an invention recorded before NTP's patents were filed, by the Norwegian telecommunications company Telenor.

Interestingly, Microsoft is already facing a lawsuit filed by Visto, a company that claims the software giant is violating its wireless e-mail patents. Visto is also a licensee of NTP's patents, said Peter Pawlak, an analyst with the research firm Directions on Microsoft.

But the truth is, even if NTP holds on to the patents and does go after Microsoft, it's still not easy to see how it could make the argument it made against RIM work against the folks in Redmond, Wash., according to analysts.

RIM and Microsoft send e-mail over wireless networks in different ways, Pawlak said. RIM's software "pushes" e-mail to devices as it is received, rather than the device having to call into the e-mail server to check for new messages. But Microsoft's software actually puts the device in a type of perpetual query state, where the device checks to see if there is new e-mail and maintains an open connection to the server until e-mail is delivered.

The difference is transparent to the user, but it could matter a great deal to the courts, he said. RIM believed it only had to make minor changes to its system to "work around" NTP's patents. RIM said it had received a legal opinion backing up its modified technology.

Therefore, it's unlikely that NTP's patents, assuming they withstand the appeals and amendment process, will be usable against Microsoft, Pawlak said. Microsoft is also just getting started in the wireless e-mail market, having brought the capability to its products just this year, he said. It doesn't have nearly the customer base that RIM does, making a possible injunction against the company less valuable.

Microsoft, of course, is no stranger to the courtroom. The company's legal resources and cash hoard dwarf RIM's, and given Microsoft's recent strategy of settling its legal disputes with cash payments, it's unlikely that the Visto-Microsoft case will reach the same heights--or depths--seen in the RIM-NTP case, Pawlak said.

Jim Wallace, an attorney with Wiley, Rein & Fielding and NTP's lead counsel in the court case, said another firm is handling the Patent Office review process, and his work with NTP is largely done. Stout did not respond to a request for comment on NTP's future Monday, and a Microsoft representative also declined to comment. The representative was checking into the current status of the Visto lawsuit.

In the end, NTP will likely end up distributing the cash to its investors and eventually disappear as a legal entity, Reynolds said. Campana was the technology heart of NTP, and if not for his death in 2005, the company would probably try to come up with new products with the windfall, he said.

But with Campana gone and RIM knuckled under, it's not clear what will be left to do for this company when the status of the patents is finally settled.

See more CNET content tagged:
NTP, patent, Research In Motion Ltd., wireless e-mail, Visto Corp.

16 comments

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I just don't get it...
If NTP's business model is just to go out and sue everyone that
tries to utilize technology from patents being rejected, where's
the point in all this??? Am I missing something? Why did RIM settle
so fast? I know the cash was in an escrow account, already
accounted for... but...
Inquiring minds want to know...
Posted by sergiobevi (23 comments )
Reply Link Flag
This is getting ridiculous
It makes no sense whatsoever for a company to be in the sole business of owning patents and finding ways to sue successful companies. We need to change the law such that if you hold a patent, you must attach it to a product on the market before you can sue someone else.
Posted by R. U. Sirius (745 comments )
Reply Link Flag
it goes further than that
Yes you are correct. There are companies out there that simply patent ideas and go around and sell that idea to other people, and there are companies out there that try to sue people who are using the idea and may have been using it even prior to it becoming patented. It's a lazy man's way of making money without really doing anything. Use somebody else's money to sue somebody else for using an idea that you own but don't use.

But let's say congress likes your idea and makes a law against it. How many other countries are out there with no laws against it?

Did you know just about everything in life is patented now and owned by one company, government, or some other organization? Bird DNA, Radio waves/frequencies, pedaling motion of a bike, just about everything.

It's really kind of stuipid, yet provides some order to chaos. Let's hear your bright idea smart guy.
Posted by Mr. Network (92 comments )
Link Flag
It's a free market...
A patent is a thing a value. Who's to say who can own, buy, or sell it? What does it mean to "have a product on the market"? Do you have to sell one unit first, or some minimum quantity of "product"? Do you have to sell one after you buy the patent, before you re-sell the patent?

If I own a patent shouldn't I be allowed to sell it to the hightest bidder, even if he/she might be a middleman or speculator?

Writers sell their copyrights to publishers. If he wanted, he could sell the rights to a middleman who has no intention of publishing the work. Once an author has made a deal, he can't even sell copies himself! The same is true in the music industry. A music group has sold their soul.. I mean their rights, and they can't make and sell the CDs themselves.

You don't have to be a farmer or food producer to speculate in wheat or pork bellies. I think you're nuts to "invest" like this, but economists will tell you that it actually stabilizes the market.
Posted by DougDbug (62 comments )
Link Flag
The horse is dead...
you can stop beating it now.
Why are all you folks so naivé as to think this government, or any other for that matter, would ever pass a sensible law that would benefit the masses?
Now that NTB has the money in their fist they can buy more government officials.
Someone should be keeping an eye on the judge... Iwonder if he's going to Disneyland to celebrate his windfall.
The enemies of freedom and free enterprise are socialism AND capitalism. Both are controlled economies that look on humans as slaves, one to the state, the other to the corporation.
Like I said, this horse died a long time ago.
Posted by El Kabong (100 comments )
Reply Link Flag
And so you're suggesting Monarchy? Anarchy?
So, from your ideas about socialism and capitalism, what do you suggest? Monarchy? Hmm, slaves to the ruler. Anarchy? Well, you're perfectly free until somebody finally guns his way to the top and then you are a slave to that person. Or maybe....an Oligarchy so you can be slaves to a small group. I think I'll take the corporations.
Posted by mwa423 (78 comments )
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