[2005-11-17] BlackBerry Workaround Finished
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The maker of BlackBerry e-mail devices says that it has finished a workaround that does not infringe on patents held by NTP.
Ontario-based Research In Motion Ltd., facing a patent lawsuit that may halt U.S. sales of its BlackBerry e-mail pagers, said it finished a new design that would keep the systems running if the company loses the case.
The so-called workaround, an alternative technology designed not to infringe on patents held by NTP Inc., is done and being tested, Co-Chief Executive Officer James Balsillie said Wednesday at a UBS AG conference in New York.
''It's a software upgrade that we are very, very comfortable with,'' Balsillie said. ``We did focus groups.''
The design may help Research In Motion keep operating in the U.S., which accounts for almost 70 percent of sales. A deal between the company and closely held NTP fell apart in June, and U.S. District Judge James Spencer in Richmond, Virginia, is now considering whether that agreement is still enforceable.
If not, he would hold hearings on whether to shut down service.
Research In Motion shares fell $2.82, or 4.2 percent, to $64.68 in Nasdaq Stock Market composite trading on Wednesday. They've dropped 22 percent this year.
NTP lawyer James Wallace of Wiley Rein & Fielding in Washington said Wednesday that his firm will examine any alterations to see if it does avoid NTP's patented technology.
'It may be so obvious a workaround, we say, `Congratulations, Jim. We agree.' I don't think that's going to happen,'' Wallace said.
If NTP believes the changes still infringe the patents, it could go to the judge and ask that Research In Motion be held in contempt, Wallace said. A contempt citation by NTP could lead to a hearing with testimony on the changes.
''It could be practically another trial,'' said patent lawyer John Hutchins of Kenyon & Kenyon in Washington, who specializes in litigation. ``The judge could rule that the new model number is in effect the same as the other ones in the injunction.''
Patent lawyer John Dragseth of Fish & Richardson in Minneapolis, who's been following the case, said it's unclear if any software changes would be enough to avoid the NTP patents.
''It's not just software or hardware; a lot of these claims go to how the system itself works,'' Dragseth said in an interview. ``If there are changes, what is it? Tell us. If it's so good, why isn't it running now? If you are an adjudged infringer and you claim to have a workaround, you better be right. If you're wrong, you may very well be found in contempt.''
The legal battle began in November 2001, when NTP sued Research In Motion alleging patent infringement. A year later, a Richmond jury determined that Research In Motion infringed NTP's patents. The Federal Circuit in Washington upheld part of that finding and sent some aspects of the case back to Spencer.
The judge issued an order blocking U.S. BlackBerry sales and service after the jury verdict. The Federal Circuit threw out the order and damage award so they could be altered to reflect the appeals court ruling. Spencer will rule on any change to the damage award at the same time he considers the injunction request.
Under the settlement agreement, Research In Motion would pay $450 million to license NTP patents.
Arlington, Virginia-based NTP, a patent-licensing firm, was co-founded by Thomas Campana, an electrical engineer who worked on pager and e-mail systems in the 1970s and 1980s.
In addition to the court case, Research In Motion is asking the Patent and Trademark Office to cancel the NTP patents. In an initial determination, the patent office rejected all the claims, or elements, of the NTP patents.
NTP has a chance to argue that its patents are valid, and either way the issue is likely to go before an appeals board in the patent office, and then to the Federal Circuit.
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