January 23, 2006 7:09 AM PST

U.S. Supreme Court rejects RIM's appeal

The prospect of a wide-scale shutdown of the BlackBerry mobile e-mail service is closer to becoming reality, as the U.S. Supreme Court on Monday turned down a request to review a major patent infringement ruling against BlackBerry-maker Research In Motion.

The court rejected a petition by Research In Motion to review a federal appeals court ruling that could lead to a shutdown of most U.S. BlackBerry sales and service.

In 2004, the Court of Appeals for the Federal Circuit, the only federal appeals court in the country for patent cases, rejected RIM's argument that it was not infringing on NTP's patents because a critical piece of the BlackBerry service was located in Canada and not in the United States.

RIM then petitioned the U.S. Supreme Court to hear the case and filed an emergency request asking to stay the lower court's decision until the high court decided whether to hear the case. But RIM lost that fight in October when its request was rejected by the court.

"Anything that increases the risk of a shutdown increases the chance of a settlement."
--Richard Williams, senior analyst, ICAP

RIM recognized that its appeal to the Supreme Court was a long shot, but it reiterated that it still has a chance at the district court level to avoid a massive shutdown of its service.

"RIM has consistently acknowledged that Supreme Court review is granted in only a small percentage of cases," Mark Guibert, vice president of corporate marketing for Research In Motion, said in a statement. "And we were not banking on Supreme Court review. The Patent Office continues its re-examinations with special dispatch. RIM's legal arguments for the district court remain strong, and our software workaround designs remain a solid contingency."

NTP filed a patent infringement lawsuit against RIM in 2001. The company won the case, and in 2003, U.S. District Judge James Spencer granted an injunction against RIM to halt U.S. sales of the BlackBerry device and its service. Spencer stayed the injunction, pending RIM's appeals.

Last August, an appeals court upheld the patent infringement claims, but scaled back the ruling against RIM.

Now that the U.S. Supreme Court has denied RIM's request to hear a case and clarify the extraterritorial reach of U.S. patent law, the company will turn its efforts to the U.S. district court in Virginia, which seems ready to move forward with the injunction. The judge in the case has ordered both sides to file response briefs by Feb. 1, and a hearing is expected within the next few weeks to determine the scope of any eventual injunction that may be issued.

To help clarify the language of the injunction, NTP last week proposed that BlackBerry customers get a 30-day "grace period" before any cutoff. The company also proposed that the injunction should exempt federal, state and local government BlackBerry users, as well as emergency first-responders, from any service cutoff.

RIM said in its filing that it would be "difficult, if not impossible" to cut service to some customers while maintaining it for the government.

The company has been claiming for several months that it has a software "workaround" to skirt the patents at the center of the legal battle. But it also has argued that an injunction would be disruptive to customers even with the workaround because implementing it requires reloading software on servers and handhelds.

"The situation looks bad for RIM right now," said Stephen Maebius, a partner with Foley & Lardner in Washington, D.C. "But on the other hand, RIM says it has a workaround ready to go. The question then becomes how easy it will be for them to flip the switch and convert customers to the workaround."

Separately, RIM is also challenging the validity of the NTP patents before the U.S. Patent and Trademark Office. Some experts say this process could take years to complete. But there are indications that the Patent Office may be moving faster than it has in the past. In December, the office issued "non-final actions" rejecting claims for two NTP patents involved in the dispute with RIM. If the Patent Office ends up saying that RIM is not infringing on any of the NTP patents in question, the case could take yet another serious twist that could lead to more legal wranglings.

But some Wall Street analysts say they don't expect an outage to occur. They are hopeful that the two companies will reach an agreement to settle the case. Last year, RIM offered to pay NTP $450 million. But NTP rejected the offer. More recently, the two sides have been in negotiations.

"In a very small increment, (the Supreme Court's rejection of the case) increases the risk of a shutdown, and anything that increases the risk of a shutdown increases the chance of a settlement," said Richard Williams, a senior analyst at ICAP. "A settlement, in our perspective, is a net positive for the stock, at least in the short run."

CNET News.com's Anne Broache contributed to this report.

27 comments

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Let 'em all suffer
If the court doesn't wait until the bad patents are revoked, then I say LET the government's users get shut down... Sorry to say it, but first responders at. al. as well...

It will be painful, but they have to play by thier own rules too. If they're going to allow bad patents, and enforce them, then they'll have to suffer with the rest of us.
Posted by bbroeman30 (14 comments )
Reply Link Flag
Government doesn't enforce, per se
The government grants the patent, and if the patent holds up in court, then the court rules on what happens and that ruling is enforced. It is not like a speeding law where the cops actively look for violators; the "victim" entity has to file a suit to get the infringment to stop. Therefore the government isn't doing anything but what the (again, quote-unquote) "victim" entity wants done with their property.
Just like a team has the option overturn a rule violation in american football, NTP is allowing part of the infringment to continue.
I don't like Blackberry. I am a Palm guy myself, but everybody is up in arms that the "government" is doing something underhanded here, but they are not. NTP is giving them a favor, just as an employee jumps at the get their boss a cup of coffee to get on his/her good side.
Posted by jnelson95747 (17 comments )
Link Flag
US Govt Exempt From Ruling?
However this ruling turns out, I'm alarmed that NTP thinks it's mandatory for RIM to cease overall operations, but somehow okay to allow government organizations to continue to use the service. Is RIM guilty of patent infringement or not? If so, how right is it to allow some people to continue infringing, and not others? That says a lot about NTP's real stake in this.
Posted by Steve Jordan (126 comments )
Reply Link Flag
Exactly!
I don't understand how the federal government thinks they should still have the right to use the devices when the civilian sector does not.

The other thing that bothers me is the whole idea behind the patent in question about sending electronic messages over RF filed in 1991. Weren't ham radio users doing this same thing before then? Also isn't this sort of the same idea behind the US National Atomic Clock in Colorado??? Transmitting a time message to clocks capable of receiving the RF signal? Not email so to speak, but you are still sending a message over RF.

Can someone also post a link to NTP's website? I google NTP and find everything but them. I'm just curious as to what NTP actually does do, besides patent vague ideas and then demand even more than the settled sum of $450 million. Extortion and greed are the first to come to mind.
Posted by SeizeCTRL (1333 comments )
Link Flag
American Idiot Patents
All these stupid patent trials happens because US grants patents for trivial things. This is a complete waste of time and non sense: a company that doesn't even use the patent can sue and turn down another that use it successfully, even if the patent is as trivial as "patent allowing people to send e-mail via wireless networks".
And some people still think we should allow this in Europe? This hasn't happened yet, and hope it won't happen in the future..
Posted by spesknight (9 comments )
Reply Link Flag
Wait Just A Minute Pal
I've just patented the idea of complaining about patents and you are now infringing on my idea. Pay up or meet my lawyers ;)
Posted by SeizeCTRL (1333 comments )
Link Flag
Doesn't apply to government employees?
If this happens and government employees are allowed to keep using the service, then I guess they may as well be exempt from any laws on the books anywhere. It amounts to the same thing. A law is a law and should pertain to everyone including the makers of the law. As far as I am concerned, if the ruling is against RIM and they have to shut down, then any government employee who continues to use the service is nothing but a common criminal and should be prosecuted and imprisoned when found guilty.
Posted by yrrahxob (77 comments )
Reply Link Flag
Law applies
I understand your complaint. It doesn't seem fair that government employees get uninterupted service. However, the truth of the matter is that they aren't breaking any law. If NTP decides to give them uninterupted service (or just continued service) that is their perogotive. Any copyright or patent holder can choose who they want to allow to use their product, and if they grant permission it is no longer an infringment. The employees will not be in violation.
Posted by jnelson95747 (17 comments )
Link Flag
One more thing
Also, NTP is probably doing this to get in good with the government. The whole political back scratching thing. If they allow the government to do something (again, something TOTALLY legal under the copyright laws) then the government may give them the same priviledge of easy on them when they legally can.
Posted by jnelson95747 (17 comments )
Link Flag
One more thing
Also, NTP is probably doing this to get in good with the government. The whole political back scratching thing. If they allow the government to do something (again, something TOTALLY legal under the copyright laws) then the government may give them the same priviledge of easy on them when they legally can.
Posted by jnelson95747 (17 comments )
Link Flag
hmm interesting
I wonder how much Palm paid out to NTP to allow their Treo devices to do basically the same thing.
At the same time who are the other licensee and how much did they pay out. Its only fair to pay as much as the next competitor for licence fee.
Basically sounds like bad patents bad judges and somebody throwing money around to keep a superior product off the market - hmmm did some one say microsoft hmmmm...
Posted by PLDK (6 comments )
Reply Link Flag
Conspiracy Theory Of the Day
It's real timely and need I say, fishy that as the new Treo 700 enters the market filled with Microsoft applications the US Supreme Court sticks it too the Blackberry folks.

LOL.... Uncle Bill is at it again....
Posted by TheLawson (1 comment )
Reply Link Flag
Conspiracy Theory
Good point. Protectionism is one thing patents are good for. They come handy for tax evasion too.
Posted by (19 comments )
Link Flag
Entirely possible
Now would good old Bill do something that is under handed? Yep. I would not be surprised if NTP is bought by Palm or MS in the future. I am sure RIM in cringing at paying that infringement bill plus another one for licensing. Ouch.
Posted by VI Joker (231 comments )
Link Flag
Government abuse!
Does anyone find it interesting that the federal government wants to exempt themselves from their own ruling? Are the government users so much more important or critical than the ordinery user?

This smacks of the same attitude the government takes regarding eminent domain.

Look into the eminent domain case with justice Souter going on. He voted to strengthen eminent domain laws and neighbors of his are trying to use eminent domain to take his 200 yesr old cabin to prove a point.

Whats good for the goose is good for the gander!!!
Posted by Superbigbob (5 comments )
Reply Link Flag
Justice?
Why, in a free market society, do the courts decide who should have a monopoly position in an industry? Patent disagreements should be resolved via mediation/arbitration, not by the Supreme Court or any other court for that matter. The courts should just uphold whatever the agreement is. A patent serves to guarantee monopoly rights for whatever over a given period of time. Using an expensive judiciary to resolve patent disputes is inefficient, and not necessarily just.
Posted by aabcdefghij987654321 (1721 comments )
Reply Link Flag
Incompetence and ignorance in the U.S. patent office
Somebody in the U.S. patent office should have been fired for approving such a generic and meaningless patent.

If this company had actually *produced* a device and was trying to enter into competition with RIM , maybe this case would have more merit.

As it is, this is a blatant attempt for a non-productive member of the market to gain from a productive member of the market. Seems to me this is a case for U.S. regulation. Although given the apparent incompetenence of the U.S. government led to this situation in the first place, maybe not.

I'm sure RIM will triumph in the end. The Blackberry is such a useful device, some Supreme Court judge will get pissed off that his isn't working.
Posted by bahead (27 comments )
Reply Link Flag
Staying in business
I hear they are routing everything out of the country it appears NTP does not have an international patent. While they would have to pay a heavy fine, operations would continue. Please correct me if i'm wrong on this but that's what I heard from a fellow employee here at Verizon Wireless. We use RIM services on a daily basis.
Posted by mrpeabody3119 (101 comments )
Reply Link Flag
A Pox on both their houses
NTP obviously knew about RIM's "violation" of their patents early on and waited until the the Blackberry had developed a mega market -- a violation of "latches" that says that if you don't assert your rights you lose them.

RIM had to do a patent search and ignored the danger of the NTP claims, thereby endangering their company and customers.

Both firms demonstrated the highest legal (and lowest moral) behaviour and ignored technical ethics. For this betrayal of the public trust at least the NTP management and legal staff will be rewarded beyond all imagination.

Hey, we as a society dictate who gets power and money. So it is really our fault if we continue to let those who interpret laws steal from those who create things of value.
Posted by TomMariner (762 comments )
Reply Link Flag
Re: A Pox on both their houses
Tom Mariner's posting closes with the observation "So it is really our fault if we continue to let those who interpret laws steal from those who create things of value."

By exempting government and emergency services from the Blackberry blackout, isn't the federal court endorsing the theft of technology from both NTP and RIM?
Posted by PaulO523 (1 comment )
Link Flag
While companies OUTSOURCE, This one NOT allowed in the 'game'???
US companies take over foreign markets but won't let foreign markets in US???

What's wrong with this picture? ;)
Posted by btljooz (401 comments )
Reply Link Flag
 

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