Blackberry Nation Survives Close Call

— April 01, 2006

Research In Motion's BlackBerry e-mail network--the wireless e-mail solution that changed a nation--has more than 3.2 million U.S. users, whose e-mail traffic accounts for 70 percent of the company's revenue. But in the wake of a long-standing patent suit pitting NTP, an Arlington, Va.--based radio communications technology firm, against the Waterloo, Ontario--based RIM, the fate of that network remained uncertain until early this March. Threatened with a federal injunction to shut down its network, RIM settled with NTP, paying $612.5 million and averting a situation that would have affected millions of U.S. customers and thousands of enterprises.

The two have been battling in court since 2001, over RIM's then-alleged infringement of five NTP patents covering the use of radio frequency wireless communication technologies used in the BlackBerry solution. In early March 2006, NTP asked a federal court in Richmond, Va., for an injunction blocking the continued use of key technologies underpinning BlackBerry's wireless e-mail service. Patent attorneys involved in the suit said a court-ordered shut down would likely affect all U.S. customers except for government and emergency workers, and RIM users worried that a shut down would be a powerful blow to enterprises reliant on the e-mail system. The injunction ruling was stayed, however, pending RIM's requests for the U.S. Patent Office to re-examine the patent filings. RIM executives said the company was willing to settle damages with NTP, while NTP executives charged that RIM was using political clout to sway the U.S. Patent Office.

The ongoing dispute sent shock waves through the wireless community. Handset leader Nokia had signed an agreement with RIM in 2002 to license the BlackBerry e-mail client software and accompanying messaging service. However, Nokia had delayed launching its BlackBerry-powered 6820 handset in the United States, citing concerns about the legal dispute. A foldable cell phone, the 6820 acts as an e-mail device when fully equipped and has a full qwerty keypad.

During the litigation, company lawyers suggested that RIM could implement a software "workaround" to replace the disputed NTP communications technology, but that the solution would take 2 million working hours to implement. Lawyers pleaded that delays in implementation would force many customers to find alternative e-mail networks.

BlackBerry's popularity, however, has continued to grow. RIM has reported 4.3 million users worldwide for the nine months ending last November. Sales rose from $294.1 million at end of fiscal year (March) 2002 to $1.5 billion in November 2005. Moreover, RIM's fortune seems assured even with the patent settlement. Nokia recently signed an agreement with NTP for the five disputed patents, which IDC analysts interpret to mean that Nokia is hedging its bets, acknowledging NTP's patent position while moving swiftly to launch its 6820 handset in the United States, along with its BlackBerry Connect USA e-mail network.

RIM executives say they are "thrilled" that Nokia is proceeding with its rollout. This may especially be due to the stiff competition RIM may soon have from Palm, Motorola and Hewlett-Packard, which are all making handheld devices with keyboards that will operate using Microsoft or third-party software.

Arielle Emmett is a freelance writer in Pennsylvania.

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