[finch]

TORONTO (Reuters) - BlackBerry maker Research In Motion Ltd. (Toronto:RIM.TO - news) will soon be able to disclose details of a software "workaround" it believes will prevent a shutdown of its U.S. service resulting from its patent fight with NTP Inc., RIM's co-chief executive said on Monday.
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RIM's Jim Balsillie also said he believes the Canadian technology firm was vindicated by "non-final" U.S. patent office rulings last week that struck down two NTP patents.

"We hope and trust the courts will consider these developments. If they don't, we do a software workaround and we keep our business going as we always have, as we always will," he told Reuters in an interview.

"We're pretty close to a time where we'll be able to disclose (details of) that."

Closely held NTP, a patent holding company, successfully sued RIM for patent infringement in 2002 and won an injunction in 2003 to shut down its U.S. service. The injunction was stayed pending an appeal process that has now been largely exhausted.

But RIM received a piece of good news last week when the U.S. Patent and Trademark Office last week issued a "non-final action" rejecting two of the five NTP patents at the center of the original dispute.

Earlier this year, it completed an initial reexamination and issued "first office actions" rejecting all five NTP patents.

RIM and NTP announced a $450 million settlement in March but the deal fell apart in June, and the court has since ruled there was no "valid and enforceable" settlement agreement.

Balsillie declined to say whether settlement talks with NTP were still on.

"I cannot talk about stuff that is covered under mediation privilege, but I will say that's what so exciting about all of this is obviously there was enormous vindication of RIM by the patent office last week," he said.

Balsillie raised the prospect of a settlement in the case in an opinion piece in the Wall Street Journal on Monday, which also criticized NTP's tactics.

"We've always tried to be reasonable. We've always fought to consider the best interests of our shareholders and stakeholders," he told Reuters.

"Heck, we even put half a billion dollars on the table and he declared it wasn't good enough. It's not like we haven't tried to be reasonable."

[martythemaniak]

Jim B wrote a op-ed for the WSJ today, clarifying where RIM stands. I thought it was interesting...

Patent Abuse

By JIM BALSILLIE
December 19, 2005

The patent system is a complex and integral part of the U.S. economy. At the same time virtually all experts, including the Commissioner of the U.S. Patent Office (USPTO), agree that the system needs reform. As the co-CEO of Research In Motion (RIM) -- the company behind BlackBerry -- I have directly witnessed one of the most flagrant abuses of the patent system and have developed a unique appreciation for some of the problems that need to be addressed.

Few contest that the U.S. patent system is overburdened. Only a few weeks ago, Patent and Trademark Commissioner John Doll was reported saying: "When you've got 1.3 million cases in the backlog, and it's taking [four to six] years to take a first office action, you've got to ask the question: Is the patent system still actually working, or are we just stamping numbers on the applications as they come through?"

Commissioner Doll is not alone. In a survey by the Intellectual Property Owners Association of the nation's top patent lawyers, over half rated the quality of patents issued in the U.S. today as less than satisfactory or poor. The future doesn't look much better. According to the survey, over two-thirds of respondents said they thought the patent process would get longer, not shorter, over the next three years. And nearly three-quarters said they would be spending more, not less, on patent litigation over the coming years.

Fortunately, both the USPTO and the Congress are making efforts to address these issues, but RIM and millions of American BlackBerry users have meanwhile been the target of a small holding company named NTP that has been aggressively working to exploit the burdens of the U.S. patent system. They are trumpeting threats and pushing frantically for an injunction that would, if allowed, impact millions of people in government and business. All of this, based on patents that the USPTO now says should never have been issued in the first place.

Our position is simple. Let the system work. Let the USPTO do its job and determine whether NTP's claims are sound or not. In the meantime, we're even willing to provide reasonable and substantial compensation. Sounds simple, right? But not when one side is trying to exploit the system by leveraging the relative speed of the judicial system while obstructing the deliberateness of the USPTO.

Many people believe that a reasonable settlement is in the best interests of both parties. And as wrongful as we think the current situation is, we've been making serious attempts in good faith to do just that. We will always do what is right for our customers, business partners and stakeholders. So why has it has been so difficult to resolve this matter? What's it really all about? The answer, camouflaged by much bravado from NTP, is simple and rather dishonorable.

It's not about industry standard negotiating practices. RIM has licensed thousands of patents and fully respects intellectual property rights. RIM has paid tens of millions of dollars to many American patent licensors, including both small and large patent holders. In stark contrast to NTP's patents and demands, however, these royalties are typically 0.5% or less for patent portfolios containing hundreds of internationally recognized and uncontested patents.

It's not about legitimacy. Based on recently revised and significantly more rigorous re-examination procedures, the USPTO has now soundly rejected all of NTP's patents on at least three distinct grounds in its rulings. The USPTO has also issued several follow-on rulings that describe NTP responses to its re-examinations as "unpersuasive," and is expected to finalize its rejections very soon.

It's not about entitlement. NTP continues to focus on an unusually high royalty rate (5.7%) granted by a jury during the original trial despite the fact that the Court of Appeals vacated that damages award and strong legal arguments remain in support of a significantly lower royalty rate. NTP also chooses to ignore the Supreme Court's recent decision to review the MercExchange v. eBay case and the circumstances in which injunctions are granted.

It's not about embracing and respecting the process within the USPTO. NTP has repeatedly and purposefully delayed the re-examination process. It's latest attempt at delay was thankfully denied by the USPTO last week. NTP also failed to comply with its duty to provide the USPTO with highly material evidence (called the "TeleNor art") until it was effectively forced to comply months later. It even recently tried to overwhelm the USPTO's re-examination process by filing over 30,000 new patent claims on top of its existing 1,921 claims (which was already considered to be an unusually high number of claims for these patents).

It's not about RIM being stubborn. Despite the USPTO's findings that NTP's patents should never have been issued, RIM is willing to reach a reasonable settlement, either through a license conforming to industry norms or with an opportunity to let the Patent Office complete its job (that is in the home stretch of a three year effort). RIM is even willing to pay a royalty rate retroactively and ongoing for as long as the patents remain valid (including ample time for NTP to exhaust all appeals). But, buoyed by its hope to exploit the asynchronous timing of the legal and regulatory processes, NTP has asked for a lump-sum payment upfront for projected royalties through 2012 for patents that have already been meticulously reviewed and rejected.

It's not about good faith. RIM has tried to play by the rules and respect the admonitions of courts and mediators. Meanwhile NTP repeatedly makes public, inaccurate, misleading and inflammatory comments and violates the confidentiality restrictions imposed on the mediation process. NTP's motive: create fear and uncertainty in the public's mind (and thereby attempt to create leverage against RIM).

It's not about integrity. RIM negotiated a settlement prior to the Patent Office's rulings. It was a handsome proposal that we agreed to abide by even after the Patent Office subsequently rejected NTP's patents and the Court of Appeals reduced NTP's claims.

It's not about the government's interests. NTP has openly jeered and trivialized the concerns expressed by the U.S. Department of Justice, despite the potential consequences on federal, state and local departments that use BlackBerry for daily operations as well as emergency communications.

It's not about the public interest. Hundreds of millions of BlackBerry messages pump through the U.S. economy daily in (and between) virtually every business and government sector, including financial institutions, law firms, utilities, telecommunications, transportation, health care, defense and emergency services. Patent rights are granted with public interests in mind. Yet NTP ignores the equities and suggests that one of the highest settlement amounts in history -- $450 million for patents that have been rejected -- is insufficient and it would rather threaten the public interest as leverage to boost its windfall even further.

It's not about pride of innovation or entrepreneurship. No one (including NTP) disputes that RIM invented BlackBerry independent of NTP's patents. Moreover, unlike NTP, RIM actually created something -- a company and a new market segment through over 20 years of innovation, risk-taking, partnering, customer service, growth and re-investment.

* * *

No, it's not about legitimacy, fairness, entitlement or anything described above. It's about greed. It's about a willingness to abuse the overburdened patent system for personal gain. The NTP lawyers have been blinded by their ambitions to the point where they turned down one of the largest settlement offers in history and a royalty rate that is 10 to 20 times higher than industry norms for uncontested patent portfolios.

Ultimately, it may be that same lust for money that brings NTP down to earth.

Even though we have been vindicated by the USPTO's analysis and we may find the idea of paying for invalid patents to be philosophically offensive, RIM will continue to be reasonable and practical. We have always fought this situation in the best interests of our customers and industry and we don't like spending money on bogus patents, but we recognize the practicality of a settlement here. It just has to be practical.

Settlement or not, RIM will continue to innovate, re-invest and service its customers. While it is not our preference, we're prepared to implement a software workaround solution to make sure our customers are well served.

It is up to NTP whether they want any future royalties. In the meantime, leaders in the private and public sector should re-examine how we reconcile an overburdened system with the emergence of litigious and avaricious groups like NTP that are in reality a debilitating drain on the economy and at odds with the constitutional purpose of the patent system.

Mr. Balsillie is chairman and co-CEO at Research In Motion, the makers of BlackBerry.

[Jitterbean]

U.S. Patent Office Likely to Back BlackBerry Maker

http://www.nytimes.com/2005/12/20/technology/20rim.html

By IAN AUSTEN
Published: December 20, 2005
OTTAWA, Dec. 19 - The technology patents at the heart of an infringement lawsuit by NTP against Research In Motion, the maker of the BlackBerry wireless e-mail device, are likely to be struck down by the United States patent office, both companies said on Monday, a move that would be a setback for NTP.

The United States Patent and Trademark Office took the unusual step of notifying the companies that it expected to reject the five patents held by NTP in its final rulings.

The office has issued preliminary rejections of all five wireless e-mail patents in the past. The final rulings may come by mid-February, earlier than expected.

"The patent owner's arguments are deemed nonpersuasive," said the patent office document, which was received last week but dated Nov. 30. "The next office action is expected to be a final rejection of all current claims."

The patent review, which was requested by R.I.M., is a proceeding separate from the patent infringement lawsuit that could potentially shut most BlackBerry service in the United States early next year.

Judge James R. Spencer, of United States District Court in Richmond, Va., who is overseeing the infringement case, has set a timetable for hearings on issuing an injunction against R.I.M. that could coincide with the timing of the patent office's final rulings.

The patent office document was sent along with a letter dated Dec. 14 in which the office introduced an accelerated timetable for the review and promised additional staff resources for the examination.

"It was a resounding rejection of NTP's position," James L. Balsillie, R.I.M.'s chairman and co-chief executive said on a telephone interview from the company's headquarters in Waterloo, Ontario. "The jig is up. I think the world is now starting to realize what is happening."

Donald Stout, a patent attorney who is NTP's co-founder, did not accept Mr. Balsillie's assessment that the patent case over BlackBerry is nearly over. He did acknowledge, however, that the company fully expects its patents - which are its only substantial assets - will be overturned by the patent office.

"I'm a realist," Mr. Stout said. "We're now considering the steps we need to take to protect our interests." They will include, he said, an appeal of the patent office rulings.

The two companies have opposing views on the effect of the patent rejections on the infringement suit.

Mr. Balsillie said that his lawyers believed that any hearings for an injunction halting BlackBerry service will be immediately put on hold if the patent office makes its rejections final. In R.I.M.'s view, NTP will be able to move forward only if it is able to regain its patents through appeals, a process that could take years.

Mr. Stout and lawyers for NTP said that the two processes were wholly separate, and that an injunction against R.I.M. remained a possibility. "We're not going to go away silently," Mr. Stout said. "Unless the case is settled, it keeps on going."

It will ultimately be up to Judge Spencer to decide whether to proceed or not. In its letter last week, the patent office specifically noted that it was speeding up its review because of earlier comments by Judge Spencer about the slowness of its process.

Carl W. Tobias, a law professor at the University of Richmond who has been following the case, said that the only thing that was predictable at this point was Judge Spencer's desire to deal with the infringement case as quickly as possible.

"The sense of most people is that he wants to move this along and not wait on much of anything else," Professor Tobias said. "He will push and hope to engage them to settle."

[SMorganPhoto]

So correct me if I am wrong, I am a little dense in the legal system. But this does sound good correct?

[Talldog]

Originally Posted by SMorganPhoto

So correct me if I am wrong, I am a little dense in the legal system. But this does sound good correct?

It sounds like NTP soon won't have a leg to stand on, but never underestimate the determination of the parasites that infest our legal system.

I must say that Balsillie's op-ed lays it all out very persuasively.

[SMorganPhoto]

Originally Posted by Talldog

It sounds like NTP soon won't have a leg to stand on, but never underestimate the determination of the parasites that infest our legal system.

I must say that Balsillie's op-ed lays it all out very persuasively.

That's what I understood as well. Thanks for the clarification!

[RLLD]

Big win I think, but there is still a long road ahead.

[Hatchy]

Here's more information on the Workaround, the "multi-mode" edition...

http://www.blackberry.com/workaround

[biellos]

i just received a text message from T-Mobile saying that the workaround was tested and confirmed by T-Mobile. www.t-mobile.com/blackberrynews

Edit: Fixed the link (had an extra "t" in it)