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Judge Spencer Spares BlackBerry Users … For Now
[February 24, 2006]

Judge Spencer Spares BlackBerry Users … For Now

TMCnet Associate Editor

America’s 3 million BlackBerry users have been spared … for now.

According to published reports, U.S. Federal Judge James Spencer has decided to postpone his decision whether to impose an injunction on BlackBerry maker Research in Motion (RIM) - thus delaying a potential shutdown of RIM’s BlackBerry service in the U.S.

It was anticipated that Judge Spencer would make the decision today during a hearing in federal court in Virginia - thus marking a turning point in the epic patent infringement case between RIM and patent holding company NTP Inc.

NTP won a patent infringement case against RIM in 2002 - and again in federal appeals court in 2004 - claiming that the software RIM developed to operate its BlackBerry service infringed upon five of NTP’s patents. The two companies came to a settlement agreement last year, but the deal fell apart when NTP requested a larger percentage of RIM’s revenue from the service. That ultimately landed both companies back in court - and put Spencer in the position of having to decide whether to grant NTP's request for an injunction to shut down the service.

Should Judge Spencer decide to impose the injunction - which could happen by late next week - it could effectively shut down BlackBerry service in the U.S., affecting approximately 3 million users of the wireless email device. However, it’s still possible that RIM will settle with NTP if Judge Spencer decides to impose the injunction – thus averting a shutdown. RIM could also end up implementing a “workaround solution” it has created as a contingency. The workaround is essentially a revised version of the email software which makes the BlackBerry service operate, only it does not infringe upon NTP’s patents.

After hearing nearly four hours of arguments from both sides, Judge Spencer said he would not immediately impose an injunction – but he did say there was no escaping the fact that RIM had already been found guilty of infringing on NTP’s patents. He told Reuters he would issue a decision on the injunction “as soon as reasonably possible.”

“The simple truth, the reality of the jury verdict has not changed,” Spencer was quoted as saying in the Reuters report. He added that the parties should have settled out of court.

Shares of RIM’s stock soared nearly 9 percent immediately after it was announced that Spencer had postponed his decision.

Meanwhile, the U.S. Patent and Trademark Office today rejected the last of NTP’s five patents relating to the case, after RIM asked it to reexamine them. However, NTP can appeal the Patent Office’s decision in revoking each of those patents.

Legal experts have, for the past several days, hypothesized that the Patent Office’s action in rejecting NTP’s patents could end up swaying Judge Spencer to decide in favor of RIM. If the Patent Office’s rejection of NTP’s patents stands after an appeals process (which could take up to a year), that action would effectively decide the case in favor of RIM, since NTP’s patents would no longer be valid.

But Judge Spencer has said the Patent Office’s decision to reject the patents is a separate action which, as of present, has no bearing on his decision whether to impose an injunction. As long as NTP files an appeal to the Patent Office, the patents are, in the eyes of the federal court, still “alive” (even though it could be argued that they are, in fact, “in flux”). Spencer has indicated that the Patent Office must issue a final rejection of NTP’s patents, as per the appeals, in order for NTP’s patent infringement case to be dismissed.

Patrick Barnard is Associate Editor for TMCnet and a columnist covering the telecom industry. To see more of his articles, please visit Patrick Barnard’s columnist page.

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