BlackBerry maker Research In Motion Ltd. and patent-holding company NTP Inc. announced they ended their long-running legal quarrel under an agreement that calls for RIM to make a one-time payment to NTP of $612.5 million.
The amount is only slightly more than the $450 million settlement the companies announced last year—an agreement that subsequently collapsed—and far below the $1 billion those in the industry had expected. Although NTP has won a series of legal moves, RIM has found favor with the U.S. Patent and Trademark Office, which has rejected several NTP patents at the heart of the case. RIM has also touted a “workaround” technology that, if implemented, would not infringe on NTP’s patents. However, the cost of that workaround could have been extremely costly.
Both companies, along with RIM investors and BlackBerry customers, expressed relief that the protracted conflict was apparently over.
“As we put this lengthy and complicated litigation behind us, we extend our sincere gratitude to all of our customers and supporters for their patience and loyalty,” said Jim Balsillie, RIM’s chairman and co-chief executive officer. “We are extremely confident and excited with our current line-up of BlackBerry products and services and we look forward to extending our technology and market leadership into the future.”
Donald Stout, NTP’s co-founder, said, “We are pleased to have reached an amicable settlement with RIM. We believe that the settlement is in the best interests of all parties, including the U.S. government and all other BlackBerry users in the United States. … NTP is pleased that the issue has been resolved and looks forward to enhancing its businesses.”
The settlement covers all of RIM’s products, services and technologies, and permits “RIM and its partners to sell RIM products and services completely free and clear of any claim by NTP, including any claims that NTP may have against wireless carriers, channel partners, suppliers or customers in relation to RIM products or services, (including BlackBerry Connect and Built-In technology), or in relation to third-party products and services, to the extent they are used in connection with RIM products and services.”
RIM said it has already accrued $450 million in savings for a potential settlement, and that the remaining $162.5 million will come out of its fourth-quarter revenues. The settlement likely won’t stand as too much of a hindrance for RIM; the company is sitting on around $1.8 billion in savings.
The settlement comes at a critical time for RIM. The company said it expects to report net BlackBerry subscriber additions of between 620,000 and 630,000 in its upcoming quarter—far below its previous expectations of between 700,000 and 750,000. RIM said the main reason for the subscriber shortfall was that “uncertainty surrounding the NTP litigation caused corporate and retail customers in the United States to defer BlackBerry purchase commitments. While some uncertainty was anticipated in December, the overall impact was greater than previously anticipated.”
The RIM-NTP settlement apparently brings to a close a years-long legal fight that captured the attention of Wall Street, the Supreme Court and the governments of both Canada and the United States. After winning a jury decision, NTP had been working to score an injunction against BlackBerry sales in the United States. Investors bemoaned the ongoing fight because of its unpredictable affect on RIM’s stock, while government BlackBerry users dreaded a court-ordered shutdown of the apparently indispensable device.
