Research In Motion Ltd. entered the appeals phase of its patent battle with NTP Inc. following a U.S. District Court’s order that essentially stalls a potential ban on sales of RIM’s products.
The U.S. District Court for the Eastern District of Virginia stayed an injunction on the sale of RIM’s products as its final order in the case. The issue now passes on to a federal appeals court. An injunction would force RIM to halt sales of its BlackBerry devices and servers in the United States, but the court stayed the injunction pending the appeals court ruling.
RIM’s chances for a successful appeal are unclear, but the company managed to further cloud the issue by convincing the U.S. Patent and Trademark Office to re-examine the disputed patents. RIM announced that now the agency will review all five of the disputed patents.
The appeals process, along with the patent re-examination, could take years. Consequently, RIM will be able to further its business objectives while the battle plays out. However, the company has set up an accounting provision to address the $53 million in damages the court awarded NTP.
“We are obviously pleased with today’s ruling and believe that the District Court’s decision to stay the injunction is especially appropriate given the frequency of successful appeals at the appellate level, as well as the specific merits of RIM’s appeal and the impending re-examination of the disputed patents by the U.S. Patent and Trademark Office,” said Henry Bunsow, RIM’s lead counsel and partner at Howrey Simon Arnold & White L.L.P.
For its part, NTP said it believes the appeals court will uphold the ruling. The company said it has made no decisions on a potential licensing agreement with RIM if it does win on appeal.
“While we pass no judgment on the validity of the court’s rulings, our valuation assumes a successful outcome of this dispute for RIM,” wrote UBS in a research note. “While the stay of the injunction is positive in the near-term, with little visibility into the potential outcome of this litigation, we believe this could act as an overhang on the stock.”
