Research In Motion Ltd. continued to play beat-the-clock last week, pleading that a shutdown of its BlackBerry service could place the nation’s public safety and economic security at risk.
The Canadian company is facing the disruption due to its ongoing legal battle with patent-holding company NTP Inc. NTP, which won an infringement lawsuit against RIM more than three years ago, has asked for a permanent injunction that would kill service to U.S. BlackBerry users.
While the injunction specifically allows continuation of service for law enforcement agencies and emergency workers-groups that represent a substantial portion of BlackBerry subscribers-RIM said in a filing with the U.S. District Court in Richmond, Va., that identifying and protecting such users would be nearly impossible. And businesses would scramble to deploy costly new communications solutions should the injunction be enforced, RIM said.
Research firm J. Gold Associates echoed RIM’s concerns about domestic enterprises, claiming a BlackBerry shutdown would force businesses to pay about $845 per worker to migrate users from RIM’s service to another wireless e-mail system.
The move was the latest effort by RIM to bide time in a nasty legal scrap analysts say could ultimately cost $1 billion or more. But while RIM and NTP each have much at stake, the long-term winner could be the patenting process itself.
The Waterloo, Ontario-based developer has consistently lost in the courtroom against NTP, but is riding a winning streak that may ultimately trump the courts. Recent weeks have seen the U.S. Patent & Trademark Office reject on a “non-final” basis all five NTP patents at the heart of the case. If the rejections ultimately stand up-an outcome the office already has indicated is likely-the patents will be invalidated and the epic court case will be for naught.
But although the patent office has publicly stepped up the pace of the NTP patent review, a final decision could be years away. NTP also could appeal the rejections first to the patent office itself and then to the U.S. Court of Appeals for the Federal Circuit. Meanwhile, U.S. District Judge James Spencer is moving forward with the case, saying he won’t wait for the review process to be finished first.
Spencer is set to hold a hearing on the injunction next month, and could effectively kill RIM’s service at any time. Meanwhile, the patent office is scrambling to figure out whether NTP’s patents never should have been issued in the first place. That’s a particularly daunting task given the scope of NTP’s claims, according to David Airan, a patent attorney at the intellectual property law firm of Leydig, Voit and Mayer Ltd. “One of the patents asserted in the lawsuit has 665 patent claims, which is an amazingly high number,” said Airan. “The typical patent has about 20.”
The case underscores what some say is a fundamentally flawed system for awarding patents. Unlike the review process, which considers both a holder’s claims as well as opposing voices, patent seekers typically face no opposition at initial hearings; it’s left up to the office itself to find “prior art,” or evidence of pre-existing technology.
NTP’s patents thus far have been rejected in review largely due to the prior existence of AlohaNet, a pioneering networking system developed at the University of Hawaii in the early 1970s.
The patent office, citing limited resources to address an explosion in the number of patents in recent years, is working to streamline the review process and prioritize claims, requiring applicants to identify the most important aspects of each invention.
“Improving the patent process will take everyone working together-applicants and the USPTO,” Jon Dudas, undersecretary of commerce for intellectual property and director of the patent office, said recently. “Better quality applications mean better examination. We need more focus throughout and closure to the examination process.”
Congress is looking to address the issue, as well, with a handful of proposals that would take the public interest into account in patent-related litigation. The move could strengthen the courts’ ability to intervene, forcing a patent-holder to enter a settlement instead of holding out for an injunction.
Some believe “the public interest” already may be flexing some muscle to accelerate the review process.
“If you have a jaundiced view of politics in government, you could say the director (of the patent office) is getting pressure from outside forces,” Airan said. “They’re holding (the office’s) feet to the fire like I’ve never seen before.”
Meanwhile, the game of chicken continues between RIM and NTP. Analysts have speculated RIM might have to pay $1 billion or more to make the issue go away, but the office’s rejections likely have emboldened the Canadian developer. The two companies agreed to a $450 million settlement last year only to have the agreement dissolve.
While NTP’s patents could be declared invalid with an ultimate rejection of all its claims, any settlement before a final decision would be binding. Any clause regarding the invalidation patents would have to be included in the terms of an agreement. Of course, a shutdown of RIM’s service would force the company to the negotiating table immediately. What’s more, only one NTP patent must be upheld by the patent office for RIM’s entire case to be lost-and that ruling could come after months, or even years, of appeals from NTP.
RIM would have no recourse, Airan said, if it were to come to terms with NTP only to have the patents ultimately thrown out. Regardless of the outcome, though, industry observers say the case has sparked the federal government to address some longstanding concerns.
