Victory for RIM: No injunction, but judge urges parties to settle

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Victory for RIM: No injunction, but judge urges parties to settle
UPDATE 1:30 pm ET 24 February 2006

Richmond (VA) – US District Judge James Spencer will not issue a new injunction, or lift the stay of his existing injunction, against Research in Motion, Ltd. today. BlackBerry service will be allowed to continue in the US. But the judge warned both sides, as CNBC’s Hampton Pearson reported this afternoon, that they must settle their dispute now, otherwise he will issue a decision that he clearly stated neither side of the dispute will much appreciate.

Commenting on his victory today, RIM CEO James Balsillie told CNBC’s Sue Herera that his company had always been willing to settle with NTP, but that the Virginia-based patent holder (now holding three patents rather than five) had continually made that feat impossible. Whether settlement is an option, Balsillie said, depends on NTP’s behavior. But they don’t have much time to act, he added, because “these patents are going away.”

Balsillie conceded his company isn’t particularly compelled to settle now, particularly after reiterating, “These patents are gone…It’s just a timing issue.” If NTP waits too long, Balsillie warned, there’s a possibility that “NTP will get absolutely nothing.”

Earlier today, CNBC has learned that the US Patent and Trademark Office has issued a final rejection of NTP, Inc.’s claims to the second of five patents that are currently being debated at today’s US District Court hearings in Richmond, Virginia. CNBC did not state which patent number was finally rejected, and notice of that rejection had yet to be posted to the USPTO Web site at the time of this wriring.

Proceedings in the patent battle between Arlington-based NTP and Canadian BlackBerry manufacturer and service provider Research in Motion got under way on time at 9:00 am ET this morning in US District Court, though proceedings there are closed to the press. At issue is whether Judge James Spencer is prepared to lift his stay of the injunction against RIM, which would bar it from supplying BlackBerry service to the US.

CNBC reported at about 11:10 ET this morning that NTP is apparently seeking a new injunction, plus $126 million in damages. This is considerably less than the $450 million that RIM and NTP were willing to settle for last year, though the amount would apparently be in addition to royalties that NTP may ask Judge Spencer to impose. Since the notion of a “new injunction” is apparently on the table, this may be an indication that the existing injunction may not be held valid.

Earlier today, MarketWatch quoted NTP attorney James Wallace as saying, “The world, we suggest will not come to an end,” by way of requesting a new injunction that could be temporarily stayed to give RIM time to implement its planned server workaround. This request may be an indication that NTP is willing to concede that the workaround would not, in its opinion, further infringe on its remaining valid patents. But Marketwatch recently amended its story to say that RIM attorneys are seeking an entirely new trial, citing that the US Patent and Trademark Office has finally rejected two NTP claims on one patent, and previously issued preliminary rejections on the other four under contention.

Earlier in the week, all indications were that Judge Spencer was prepared to draw this matter to a quick conclusion. That goal may have been thwarted on Wednesday, when the US Patent and Trademark Office issued a surprise final rejection of two of NTP’s claims on US patents. While seven other claims remain under dispute, the initial injunction imposed by Judge Spencer referred to all nine, which could give RIM grounds to appeal should the judge decide to lift his stay. In such a case, the judge may have to impose a new stay – perhaps a temporary or self-expiring one – pending the outcome of such an appeal.

Such a temporary stay could give the Patent Office time to issue decisions regarding its re-evaluation of the other seven claims, which now principally center on four patents. Such re-examinations have typically taken months, though the Patent Office has apparently discovered a fast track for pressing matters such as this.

The other possibility is that the judge may invalidate the existing injunction; in which case, if he imposes a new injunction on just the remaining seven claims, RIM could be allowed to re-launch its entire appeals cycle. Last month, the US Supreme Court declined to hear RIM’s appeal, but that was before the USPTO issued that final rejection.

This morning, financial analysts on CNBC predicted that Judge Spencer would force both sides in the dispute to accept the terms of a $450 million settlement reached between them last year, though sources indicate this may not be possible, as NTP’s claim has been upheld that the form of that agreement was not legally binding. Yesterday, the CBC reports, RIM co-chief executive Jim Balsillie told a Webcast of financial analysts that he would be willing to consider paying more for a settlement with NTP, but only if it protected the long-term interests of his company.