BlackBerry maker Research In Motion Ltd. suffered yet another setback as the Supreme Court declined to halt NTP Inc.’s case against the company. Although the ruling stands as a relatively minor legal move, it serves to again highlight RIM’s thinning options.
Indeed, the court’s ruling brings RIM one step closer to an injunction-a potentially devastating legal condition that would force the company to freeze U.S. sales of its popular BlackBerry wireless e-mail device. Most industry watchers expect RIM to reach some sort of settlement with NTP before it would acquiesce to an injunction, but the threat nonetheless hangs over the company like a guillotine.
“We believe ongoing NTP-related litigation continues raising concerns of interrupted BlackBerry sales in the U.S.,” wrote T. Michael Walkley with Piper Jaffray. The firm makes a market in RIM securities. “While we continue to believe the threat of an injunction could cause RIM to settle with NTP at a higher amount than the $450 million RIM proposed, we believe the uncertainty and distraction created by this well-publicized dispute could slow near-term sales.”
RIM earlier this year announced a settlement with NTP, but the deal fell through shortly thereafter. The threat of an injunction could increase the amount of a renewed settlement.
Investors have illustrated their worries by sending RIM’s stock tumbling. Just two months ago RIM’s stock was trading at around $80 per share, but it’s now hovering around $60. Indeed, the Nasdaq on Oct. 21 had to halt trading in RIM’s shares due to worries over negative court rulings.
Analysts appear confused about the situation. RBC Capital Markets last week downgraded the company, while Citigroup issued an upgrade. Piper Jaffray’s Walkley lowered his revenue expectations and stock price target.
In RIM’s latest legal impediment, the Supreme Court declined to halt NTP’s case against RIM. However, the ruling still leaves open the possibility that the Supreme Court will ultimately hear RIM’s appeal. The ruling sends the case back to a district court.
“While further review by the Supreme Court is generally uncommon, RIM continues to believe this case raises significant national and international issues warranting further appellate review,” the BlackBerry maker said in a statement.
While the case ricochets among various courtrooms, several external issues remain in play. The U.S. Patent and Trademark Office recently rejected all of the patents at issue in the case-but it’s unclear how the USPTO’s ruling will ultimately affect the situation. Further, RIM executives boast they have developed a “work around” that would not infringe on NTP patents. However, the company has declined to provide further details. Again, it’s unclear how such a move will affect NTP’s current case.
In related news, RIM said it entered a licensing deal with Forgent Networks for its digital imaging technology.
