BlackBerry Ltd. (BBRY) won a court order barring Ryan Seacrest’s Typo Products LLC from selling a $99 iPhone case after convincing a judge that Typo is probably infringing its patents.
U.S. District Judge William Orrick in San Francisco said in a ruling yesterday that BlackBerry is likely to prevail on its infringement claims and that Typo hasn’t made a strong challenge to the validity of the smartphone maker’s patents. Orrick also dismissed Typo’s concern that a temporary sales ban may put the company out of business if it can’t fulfill orders.
The ruling came after BlackBerry Chief Executive Officer John Chen said earlier yesterday that sales won’t grow until the fiscal year that begins next March. The outlook put a damper on earnings results that showed Chen is making progress in restoring BlackBerry’s profitability. The shares dropped to a two-month low after Chen’s comments, wiping out a gain of as much as 6.5 percent earlier in the day.
“BlackBerry has convincingly shown that BlackBerry’s keyboard designs are a key driver of demand and goodwill for BlackBerry phones,” Orrick wrote. Typo’s keyboard directly targets the segment of smartphone users that prefer a physical keyboard, the market in which BlackBerry competes, Orrick said.
In January, BlackBerry sued the Los Angeles company founded by the radio and TV producer and host of “American Idol,” alleging that Typo’s external case for the iPhone 5 and iPhone 5s infringes BlackBerry’s design and copies its inventions. BlackBerry, based in Waterloo, Ontario, sought a court order blocking sales of the case while the lawsuit proceeds.
Typo said it’s disappointed with yesterday’s decision and that it will appeal the order. The company will “continue to make and sell innovative products that busy people can’t live without,” according to an e-mailed statement.
The judge rejected Typo’s contention that BlackBerry isn’t irreparably harmed by Typo’s actions because it’s already struggling and losing market share.
The ruling requires BlackBerry to post a bond in an amount sufficient to pay damages sustained by Typo if it’s later found that the injunction shouldn’t have been granted. Once the bond is posted, which could take as long as two weeks, Typo is barred from selling the keyboard case, Orrick said.
The similarities between Typo’s iPhone case, which has a keypad that attaches to the iPhone 5 and iPhone 5s to allow users to easily tap out messages, and the keyboard for BlackBerry’s Q10 smartphone are “unmistakable,” Kevin Johnson, BlackBerry’s lawyer, said at a March 21 hearing. BlackBerry would be irreparably harmed by lost sales of its smartphones and consumer confusion over the devices unless the sales are stopped, BlackBerry said.
BlackBerry has lost business to Apple and Google Inc.’s Android devices. Its share of the global smartphone market tumbled to just 1.7 percent in the third quarter from 4.1 percent a year earlier, according to research firm IDC.
The stock fell 7.1 percent to $8.41 at the close yesterday in New York, the lowest since Jan. 14. It was the biggest one-day decline since Dec. 26.
The case is BlackBerry Ltd. v. Typo Products LLC, 14-00023, U.S. District Court, Northern District of California (San Francisco).
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