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NTP Rattles BlackBerry Users With `Unthinkable' Shutdown Threat Dec. 15 (Bloomberg) -- A large polystyrene hand with its index finger raised triumphantly sits in Donald Stout's office in Arlington, Virginia, just across the Potomac from Washington, D.C. ``Go NTP!'' handwritten letters on the finger say. The display is the only indication in a room cluttered with legal boxes that Stout is at the center of a battle over whether 2 million people in the U.S. can continue to use a product that's become both status symbol and addiction -- Research In Motion Ltd.'s BlackBerry e-mail device. In one of the rare patent-infringement cases to seize public attention, NTP Inc. is a judge's ruling away from forcing BlackBerry screens across the nation to go black. The possibility has alarmed users, nowhere more so than in the nation's capital, where being in the know is synonymous with being somebody. The Washington Post has run stories assuaging the fears of policy wonks and lobbyists and giving advice on what to do just in case. ``The thought makes my thumbs twitch,'' D.C. blogger Wonkette wrote on Dec. 1. ``Unthinkable, unimaginable,'' lobbyist Anthony Podesta said (via BlackBerry). ``It's been a wild ride,'' said Stout, a 59-year-old co- founder of NTP, which has been painted as the villain of the piece. Lawmakers including U.S. Representative Rick Boucher, a Virginia Democrat, cite the case in pushing for the most sweeping changes in patent law in five decades. No Employees While a court-ordered shutdown would exclude federal employees, even the government has weighed in, urging in court filings that the Justice Department participate in the wording of any order to make sure government workers are spared. Still, Research In Motion has said it may not be able to segregate users if it has to stop service. Co-Chief Executive Officer James Balsillie said on Nov. 16 Research in Motion has a design that works around the patents if the judge rules against the company. Research in Motion hasn't provided any details of this ``workaround,'' and the company declined to comment for this story. The fight casts light on a little-known nook of businesses that operate at the nexus of law and technology. These enterprises, sometimes known as ``paper patent'' firms because they have patents but no products using them, try to make money by licensing their patents to other companies. NTP fits the description. The company has no office and no employees. (Stout's office is at the law firm Antonelli, Terry, Stout & Kraus, where he is a partner and has worked for 22 years.) `Patent Troll' NTP's only assets are patents obtained by Thomas Campana, an electrical engineer who died in June 2004. Until the Research in Motion lawsuit, Stout kept the patents in his desk drawer. Now they're at another law firm. Certain paper-patent firms have been tagged with another description, coined by an executive of Intel Corp. after it had been sued for patent infringement: ``patent troll.'' This refers to those who own patents strictly to milk money from companies by demanding cash to avoid a costly lawsuit. Often, the term is applied to firms that circle around bankruptcy courts to scoop up patents from failed dot-coms. The U.S. Supreme Court is considering whether to limit the ability of patent owners to obtain injunctions if they don't make products based on the invention. The U.S. Patent and Trademark Office also is re-examining the NTP patents after complaints from lawmakers and Research in Motion. NTP is not a troll, Stout said. ``Trolling is an invention of companies that get sued a lot and don't like to settle and when they get nailed, they want to say, `Oh woe is us,''' he said. Four-Year Trail The four-year trail leading to the showdown with Research in Motion shows NTP to be a technology pioneer merely seeking its due, Stout said. According to Stout and court records, he met Campana in 1987, when a now-defunct company called Telefind asked for help in protecting its innovations. Telefind, based in Coral Gables, Florida, was working on a pager that could roam into different regions at a time when pagers were limited to local networks. Campana was vice president of engineering at Telefind, one of several jobs he would have as a contract engineer as he moved from one startup to another. As Telefind was running out of money, Campana worked on the side on a system for sending e-mail from computers to pagers and other wireless devices. Campana later won a lawsuit in which a Telefind-related company tried to claim the patents. Campana asked Stout to set up a company so he could keep his inventions separate from his contract work. The result was NTP, which stood for New Technology Products. Canada's Pride In 1990, Campana exhibited his e-mail system at Comdex, then the premier event for showcasing new electronics products, and proceeded to obtain a series of patents. Research In Motion Co-Chief Executive Officer Mike Lazaridis, meanwhile, was building his company, which he founded in 1984, when he was a computer science major at Canada's University of Waterloo. Research in Motion remains in Waterloo and is one of Canada's biggest success stories, adding an element of national pride to the fight with NTP. Research In Motion unveiled the BlackBerry in 1999. It was a hit, appealing to a broad market of people who wanted to be able to send and receive e-mail from anywhere, including traders, lawyers and executives. Research in Motion says it had 3.65 million customers worldwide as of the end of August. The company earned $213.4 million on sales of $1.35 billion in the fiscal year ended Feb. 26. `Fly in the Ointment' ``They've obviously created a kind of industry, and a cult,'' Stout said. ``There's a little bit of a fly in the ointment: They infringe somebody's patent rights.'' NTP has never said that Research In Motion knew of Campana and his patents when it developed the BlackBerry. ``There was never any issue of copying,'' Stout said. Stout says he became aware of Research In Motion after reading of another patent suit against the company. He sent a letter to Research In Motion in January 2000, alerting the company to Campana's patents and asking for a meeting to discuss licensing. He didn't get a reply until after NTP sued in November 2001, he says. Research in Motion says it did reply, requesting more information. A jury found that Research In Motion had failed to investigate the letter's allegations, and had willfully infringed on the NTP patents. The jury ordered Research in Motion to begin paying royalty fees to NTP. Deal Collapses Research in Motion appealed the verdict. Campana, the inventor, didn't get to see whether it would stand. A heavy smoker, he died of cancer of the esophagus at the age of 57, the day after arguments were heard on the appeal. The appeals court sent the case back to the trial judge for reconsideration. In the meantime, the companies reached a tentative agreement in March calling for Research in Motion to pay NTP $450 million. The deal collapsed in June. On Nov. 30, the trial judge rejected Research in Motion's request that the March agreement be enforced and said he may issue an order blocking BlackBerry use in the U.S. That prospect doesn't sit well with Washington lobbyist Podesta, whose staff has been using BlackBerrys since 1999. He likens the idea of a switch to a Palm Inc. Treo or other alternative as ``being dumped in Iran and trying to learn Farsi.'' While Stout says NTP has received considerable public support for its case, he says he also has ``met a lot of people you wouldn't want to know'' and been verbally abused. In an October report, analyst Rob Sanderson of San Francisco-based American Technology Research called NTP ``a parasite'' and Research in Motion ``the only host.'' ``Someone compared me to Osama bin Laden,'' Stout said. ``What I did was what most people wouldn't have the guts to do.'' To contact the reporter on this story: Susan Decker in Washington at sdecker1@bloomberg.net . Last Updated: December 15, 2005 00:10 EST | ||