Feb. 24 (Bloomberg) -- A judge considering a halt in U.S. BlackBerry e-mail service criticized both sides in the case for not settling their patent dispute and said he will rule later on a shutdown.

U.S. District Judge James R. Spencer of Richmond, Virginia, said he probably will rule first on how much money Waterloo, Ontario-based Research In Motion Ltd. owes the patent owner, NTP Inc., in damages, based on a 2002 infringement verdict.

Spencer probably will issue the order, called an injunction, to shut down the service in the U.S. except for government and emergency workers, patent lawyers say, citing past cases. The company gets 70 percent of its revenue from U.S. operations.

``The balance is in favor of'' a court-mandated shutdown, Brian Ferguson, a patent lawyer at McDermott Will & Emery in Washington, said before the hearing. ``It's just a typical, garden-variety patent case. We get injunctions all the time that prevent certain technologies from being used.''

In the morning-long hearing, a Research In Motion lawyer said a ``workaround'' the company developed to deal with a shutdown would take 2 million man-hours to implement.

``It's not something that can be done overnight,'' company lawyer Henry Bunsow told Spencer. Bunsow didn't translate the man-hours into calendar days as he presented arguments on why Spencer shouldn't halt the service. Research In Motion also asked that any injunction be delayed.

Research In Motion has said it developed technology to ``work around'' patents owned by Arlington, Virginia-based NTP. In court papers, it stressed the difficulty of introducing the changes and said the switch would drive off some customers.

Patent Office Ruling

In a parallel proceeding, the U.S. Patent and Trademark Office ruled that one of the patents in dispute in the Virginia case should be canceled, Bunsow said today. The agency made similar findings on two other patents involved. Spencer has said he won't wait for the process to be finished before ruling in his case. Appeals of the patent office rulings could take a year or more.

Besides the injunction issue, Spencer must determine how much money Research In Motion should pay NTP for past infringement. NTP asked Spencer to order Research In Motion to pay $126 million in damages no matter how he rules on the shutdown.

John Wyss, an NTP lawyer, asked Spencer to order Research In Motion to pay for infringement of NTP hardware and software patents that occurred before November 2002. NTP lawyer James Wallace asked the judge to halt the portable e-mail service as well, based on jury findings of infringement in November 2002.

U.S. Customers

``The world will not come to an end if Your Honor enjoins their improper conduct,'' Wallace said. ``RIM is doing everything they can to drive NTP into the ground.''

Research In Motion has about 3.2 million U.S. customers, including Wall Street bankers, members of Congress and White House officials. President George W. Bush is among them.

Spencer, who may issue his ruling at a later date, said nothing during the presentations by NTP and Research In Motion lawyers.

NTP, a patent-licensing company, filed a lawsuit in November 2001, accusing Research In Motion of infringing five patents.

A year later, a jury in Richmond sided with NTP and said Research In Motion should pay 5.7 percent royalties. Spencer increased that to 8.6 percent based on the jury's finding that Research In Motion ignored a letter from NTP alerting it to the patents and requesting a meeting.

The judge in August 2003 ordered Research In Motion to stop selling certain models of the BlackBerry and halt use of the BlackBerry software. He put that ruling on hold while Research In Motion appealed.

Reasons to Wait

An appeals court upheld part of the jury verdict. It threw out the damage award and the injunction and sent the case back to Spencer for reconsideration.

Research In Motion has asked that any new injunction be put on hold. The reason would be either to await a final decision from the U.S. Patent and Trademark Office on a review of the NTP patents, the results of a Supreme Court hearing on the general issue of injunctions in patent cases, or for Research In Motion to file yet another appeal.

About 70 percent of the company's revenue comes from sales of the hardware, with airtime sold by wireless carriers. The growth in BlackBerry users has been crimped by the suit.

Research In Motion said it has developed a ``workaround'' that will allow it to continue service even if Spencer orders the company to stop using NTP's patented technology. Switching to a workaround may afffect the device's adoption, American Technology Research analyst Rob Sanderson said yesterday.

Research In Motion shares have risen as much as 12 percent this year, a sign that investors are anticipating the case may be resolved through a settlement before any shutdown. The shares rose $2.53 to $72.06 at 12:33 p.m. today in Nasdaq Stock Market composite trading.

The case is NTP Inc. v. Research In Motion Ltd., 01cv767, U.S. District Court, Eastern District of Virginia (Richmond).

To contact the reporters on this story: Susan Decker in Washington at sdecker1@bloomberg.net; Cary O'Reilly in Washington at caryoreilly@bloomberg.net.

Last Updated: February 24, 2006 13:11 EST