Why are they talking about shutting down the BlackBerry wireless network? Because about two years ago BlackBerry vendor Research In Motion Ltd. in Waterloo, Ontario, lost a patent infringement lawsuit in U.S. courts brought by a company called NTP Inc. The court awarded NTP damages amounting to US$53.7 million and issued an injunction that would shut down the operation of the BlackBerry network in the U.S. RIM got a stay of execution for the injunction, but NTP is expected to seek to have it reimposed later this month.
What is NTP Inc.? NTP is a holding company created in 1992 to manage certain patents belonging to Thomas Campana, an electrical engineer. The firm operates out of a lawyer's office in McLean, Va. It has licensed patents to other companies and has two dozen shareholders, mostly lawyers in the Washington area. In 2002, Campana sued RIM for infringing five of his patents and prevailed in the original trial and on appeal. He died in June 2004, but NTP has carried on the suit.
What does NTP have against RIM? They want royalties for the patents. The injunction is a weapon given by the court to NTP so NTP can ensure payment.
"We have said that we are more than willing to license RIM on a reasonable royalty-paid-up basis," said Jim Wallace, a lawyer with Wiley Rein & Fielding LLP in Washington and lead trial counsel for NTP. "RIM has the keys to its own jail."
RIM did not comment for this article, but has stated repeatedly in documents that it considers an injunction "inappropriate" on public interest and legal grounds.
Are BlackBerry users in trouble? They're not involved in the lawsuit. But if the injunction does go into effect, they may lose service inside the U.S. There would probably be exceptions for users in public safety organizations, plus a 30-day grace period.
But while RIM has exhibited a penchant for brinksmanship, it is considered unlikely that RIM will submit to an injunction rather than settle. As noted by Gartner Inc. analyst Martin Reynolds, RIM has 4 million users paying $25 a month -- and no responsible company walks away from $100 million per month in revenue.
What are those infringed patents? Principally, we're talking about good ol' 5,436,960, titled "Electronic mail system with RF communications to mobile processors and method of operation thereof," which was filed May 20, 1991. And then there are four others: 5,625,670, 5,819,172, 6,067,451, and 6,317,592, each with a similar title; they are considered continuations of the first.
What do the patents cover? To quote the trial findings, they describe a system where "a message originating in an electronic mail system may be transmitted not only by wireline but also via RF, in which case it is received by the user and stored on his or her mobile RF receiver. The user can view the message on the RF receiver and, at some later point, connect the RF receiver to a fixed destination processor, i.e., his or her personal desktop computer, and transfer the stored message."
Isn't that too obvious to be patented? A lot of patents seem obvious after the fact, noted Reynolds, adding that it hardly seemed obvious in 1991.
If imposed, how long would the injunction last? Until the expiration of the last patent, on May 20, 2012. But there's a question as to whether the patents will be around that long because all five have received a "nonfinal rejection" from the U.S. Patent and Trademark Office (USPTO).
But if the patents have been rejected, how can there be a patent infringement lawsuit? Because a patent is not considered invalidated until all appeals are exhausted. The patent owner can ask for a re-examination of a nonfinal rejection, and a final rejection can be appealed to the USPTO's Board of Patent Appeals and Interferences. The board's decisions, meanwhile, can be appealed to the federal Appeals Court.
"Patent law and case law do not intersect until the very end," noted Peter Misek, a analyst at Canaccord Adams, an investment bank in Toronto.
Why were the patents rejected? On re-examination, they ran afoul of recently discovered prior art, meaning that something similar had been described in print at least a year before the patent was filed. (Prior art is what keeps you from patenting the wheel.) The examiners were especially troubled by a 1989 planning document for a mobile data network by the Norwegian Telecommunications Administration, called Telenor '89. Certain claims were subject to additional legalistic quibbling.
But if the patents are headed toward rejection, why does NTP bother fighting? Because NTP thinks the patents will be upheld. Wallace says the patent examiners, in making the rejections, used an overly broad construction of the patents' specific claims. The narrower construction was upheld in the infringement suit, and he is confident it will be upheld again if and when the patents reach the federal Appeals Court.
So, as long as the patents are considered valid, NTP has RIM in a corner? RIM has stated that it has another alternative: It can re-engineer its system so that it does not infringe on the NTP patents, presumably downloading new software to its installed base of customers. If the court agrees to the idea, then the possibility of a shutdown goes away for the near future.
"But there could be a new trial every time the software is updated," warned Reynolds.
"Implementing a work-around will only delay things," agreed Misek.
And if the court isn't impressed by the work-around? Then RIM may indeed be driven to open its checkbook. But that probably won't happen until they try additional maneuvers, such as bringing up Telenor '89 at the injunction hearing.
Didn't RIM and NTP come to an agreement last March and end the case? They mutually announced an agreement that involved a $450 million settlement, but it fell apart several months later. The reasons remain confidential, but are assumed to be related to the old saying that "the devil is in the details."
Why do people keep referring to the CrackBerry? Because the BlackBerry, like crack cocaine, is highly addictive, especially to hard-charging types who want to stay in constant touch. That's a joke, in other words.
Lamont Wood is a freelance writer in San Antonio.