Judge Rules BlackBerry Settlement Invalid

U.S. District Judge James R. Spencer has ruled a $450 million patent infringement settlement between NTP, Inc., and Canada’s Research In Motion is invalid, throwing open the doors to a possible shutdown of the BlackBerry network in the United States, or forcing RIM to agree to a much (much!) larger settlement figure.

NTP is a small Virginia-based patent holding company created in 1990 by Thomas Campana to protect his work creating a system to send email between computers and wireless devices. NTP currently has no products and only a minimal infrastructure, but the company wound up holding patents on Campana’s development efforts after his client disintegrated. In the late 1990s, Canada’s Research in Motion (RIM) debuted its BlackBerry wireless email device, and a now-epic patent dispute got underway. NTP first offered to license its patents to RIM; never hearing back, it filed an infringement suit against RIM in 2001 and in 2002 a Virginia jury awarded NTP 5.7 percent of U.S. BlackBerry sales. Judge Spencer later increased that figure to 8.55 percent, and the total of damages and fees due NTP currently stands in excess of $200 million.

For its part, RIM has staunchly denied infringing on NTP’s patents, and, despite harsh words from Judge Spencer regarding its conduct in U.S. courts, won a stay of the court’s injunction pending appeals. However, the appeals court held up most of the lower court’s findings, and, still not admitting to infringement, RIM reached a $450 million settlement with NTP in March 2005. But by July the deal was on the rocks, as the U.S. Patent and Trademark Office began re-examining NTP’s patents and, in a headspinning development, has preliminarily rejected them. RIM, buoyed by optimism NTP’s patents would be declared invalid, sailed onward while carefully developing workaround technology for BlackBerries in the event the court case turned ugly.

And now, the case has gotten ugly. In addition to declaring RIM’s $450 million settlement with NTP invalid, Judge Spencer has also denied RIM’s request to delay the case until word on the validity of NTP’s patents comes down from the U.S. patent office. Judge Spencer’s next action is to set briefing schedule and hearing date regarding injunctive relief and damages. Judge Spencer could reinstate an order shutting down BlackBerry service in the United States.

RIM is widely seen as having two options to keep the BlackBerry network operating: hastily reach a new settlement with NTP