Despite expectations by industry and legal analysts that Research in Motion would settle its ongoing patent dispute with NTP, the BlackBerry maker came out swinging yesterday, bolstered by recent decisions by the US PTO (Patent and Trademark Office) that call NTP's claims into question.
RIM lashed out Monday with an opinion piece in The Wall Street Journal accusing NTP of prolonging the PTO's reexamination of the patents in hopes of getting a US injunction on the sale of BlackBerry devices and services before its patents are struck down. RIM is willing to settle the case, and would agree to pay a fair royalty rate, but only as long as the patents in the case remain valid, wrote Jim Balsillie, chairman and co-chief executive officer of RIM, in the essay published yesterday.
The PTO has already issued "non-final office actions" that invalidate NTP's claims at issue in the dispute, and its recent decision to expedite its process of issuing final actions could assuage Judge James Spencer's concerns that the PTO is holding up the legal process, Balsillie said in a phone interview yesterday.
NTP's patents cover a system for distributing wireless email to mobile devices. A jury and appeals court have found that RIM's BlackBerry devices and software infringe on those patents, and the final hearings in the case are looming before a Virginia judge who is expected to reimpose an injunction that would stop BlackBerry users from receiving their email in the US. That injunction was stayed during the appeals process and lifted by an appeals court that decided a key claim was misinterpreted. However, that same appeals court upheld the fundamental finding of infringement. Observers now expect the lower court to reinstate the injunction.
Last week, the PTO denied several NTP requests for more time to respond to the preliminary findings and created a special team to handle claims related to this case, which has generated "outstanding public interest," it said in documents available on its website. On 30 November, Judge Spencer of the US District Court for the Eastern District of Virginia denied RIM's request to stay the trial pending the PTO re-examination process, saying it could take years before a resolution was reached through that process.
The patents were initially rejected because other inventions similar to the NTP patents were on record prior to NTP's filing, the PTO said in the preliminary actions it issued in June. Since then, the PTO has also learned of additional prior art developed by Telenor ASA, the Norwegian telecommunications company, that it cited in the most recent claim rejection announced this month.
NTP has the right to appeal any final action to the PTO's board of appeals, and beyond the PTO to the US Court of Appeals for the Federal Circuit, said James Wallace, an attorney with Wiley, Rein & Fieldling, in Washington DC, representing NTP. That appeals court has already ruled that the BlackBerry infringes on the patents using a narrower claim description, he said.
"The court of appeals said the claim covers a square city block," Wallace said in comparing the PTO's viewpoint and that of the court of appeals'. "But the PTO said it covered two blocks." The entire appeals process could still take years, he said.
However, RIM believes that if the PTO quickly issues final actions invalidating the patents, it would create enough doubt around the patents to persuade the lower court to halt the proceedings until the validity of the patents is settled, Balsillie said.
"The PTO has said, 'We'll be on time, and we'll reject these claims.' If that's persuasive to the court, then great. If not, then we'll have to do the workaround," Balsillie said.
RIM has not provided many details about the "workaround" it would use to keep the service up if the injunction is imposed. The company doesn't want to tip its hand to NTP about how the workaround bypasses the disputed claims, but it is based in software, Balsillie said in the interview. RIM would incur some costs to implement the fix, but it is prepared to do so if the legal arguments don't fall the company's way, he said.
RIM and NTP have been in court-ordered mediation talks, but neither party would comment on how those talks were progressing last week. Earlier this year, the companies agreed to a settlement with a lump-sum payment of $450m (£254m) that did not involve royalties, but that agreement fell apart. The Wall Street Journal reported last week that NTP was now seeking 5.7 percent of RIM's revenue on BlackBerry sales, and CNBC reported that the company wanted a lump-sum payment as well.