RIM's Biggest Day in Court
Patricia Wilkey has 202,000 reasons to keep her eyes glued to a laptop screen on Feb. 24. She'll be scanning wire services and Web sites for any news on the fate of the popular BlackBerry mobile e-mail service. The head of wireless strategies at computer-services provider EDS, Wilkey manages 2,000 BlackBerry devices in-house and handles service calls for another 200,000 used by EDS clients.
After weeks of preparation and conversations with executives at Research in Motion (RIMM) and customers around the world, Wilkey is girding for BlackBerry's D-Day. "I have a ticker set for news on my laptop. But even if I miss the news somehow, I'll get a few hundred e-mails from my community if anything happens," Wilkey says.
She's in the same boat as millions of addicts of the handheld device known mordantly as the CrackBerry. The legal squabbles between BlackBerry maker Research in Motion and privately held NTP will come to a head at 9 a.m. in a third-floor courtroom in Richmond, Va.
There, Judge James Spencer of the U.S. District Court for the Eastern District of Virginia will consider the fate of 3.2 million U.S. BlackBerry users. After being found guilty of infringing NTP's patents by a jury in 2002 and exhausting its appeals, RIM will make a last-ditch effort to fend off an injunction that effectively will shut down the service across the country.
WILL SERVICE HALT?
During the hearing, Spencer will hear from NTP, RIM, and the Justice Dept. on whether he should reimpose an injunction he halted so that RIM could appeal. Spencer also will decide how much RIM owes NTP in damages for patent infringement.
In briefs filed for the hearing, NTP has argued for $125 million in damages and a broad injunction that immediately stops the sale of new BlackBerry devices and halts use of the service by existing U.S. BlackBerry subscribers in 30 days (see BW Online, 12/08/05, "The BlackBerry Widow's Tale").
RIM is expected to argue that an injunction should be limited or stayed. Its reasoning? The court should at least wait for the outcome of a review of NTP's patents by the U.S. Patent & Trademark Office. What's more, an appeals court in August, 2005, rolled back some of the earlier infringement rulings.
The Justice Dept., meanwhile, says the court shouldn't impose an injunction until it can ensure service isn't disrupted for the hundreds of thousands of government workers, contractors, and emergency responders who use BlackBerries.
The back-and-forth drama that has characterized the legal battle from the start carried through to the end. On Feb. 21, NTP filed with the court documents obtained through a Freedom of Information Act request. NTP says they show the USPTO's review had been influenced by RIM lobbyists, one of whom is a former high-ranking USPTO official, and Canadian government officials.
RIM fired back on Feb. 23 with a court filing saying that none of the documents showed improper influence. RIM also asked the court to take into consideration letters written in 2002 by execs at Sprint (S), Qualcomm (QCOM), and Nextel (then an independent company), who urged the USPTO to reexamine NTP's patents. The USPTO started a reexamination in January, 2003.
It's difficult to guess what the judge will decide. But based on legal precedent in patent cases and Spencer's own past impatience with some of RIM's legal tactics, it's likely he will impose some kind of injunction. As an indication that he is disinclined to wait for the USPTO to finish its review, Spencer recently denied a motion by the Justice Dept. to hold a separate hearing on the feasibility of imposing an injunction.
"The reality is, this judge has signaled his feelings already and NTP won a jury trial already," says James Hurst, a patent lawyer and partner at Winston & Strawn in Chicago. "Under the normal operation of patent cases, they are entitled to an injunction unless there are extraordinary circumstances."
RIM has argued that the USPTO examination (a review of eight NTP patents) amounts to just that. But after an appeals court in August scaled back the initial infringement ruling, only four patents remain at the heart of the case. Meantime, the USPTO has created a fast-track review for the NTP patents that could be creating some brinksmanship.
Just this week, the USPTO issued a final rejection of one of the four remaining patents. The other three have been rejected in preliminary reviews, and the USPTO has said it expects to reject them in final reviews that could come down as early as this month.
Nevertheless, the status of the patents could drag on for months. Even if they are rejected , NTP can appeal to a board within the USPTO, and then to a federal Circuit Court of Appeals. This could take months. That's why some lawyers say Spencer won't wait for the USPTO. "He's basically already indicated that he doesn't give a hoot about the USPTO activity," says James Dabney, an attorney at Fried, Frank, Harris, Shriver & Jacobson.
SCOPE OF INJUNCTION.
If Spencer does decide on an injunction, the question will be when and how broadly it's imposed. NTP, of course, wants a broad injunction. RIM is asking the court not to impose an injunction on devices that have already been sold. The company argues that because of the jury verdict, it already has an implied license with NTP on these devices, and so they shouldn't be covered by an injunction.
Whatever the decision, it may not get handed down Feb. 24. Spencer could hear the arguments and then wait a few days, even weeks. Some judges draft their decisions or even give an oral decision at the end of a hearing, quickly followed up with a written decision. But because this case has been so closely watched, he won't want to give the impression he didn't completely consider all sides. "It's unlikely he will write something ahead of time," says Thomas G. Carulli, a patent attorney at Kaplan, von Ohlen & Massamillo. "It smacks of not listening to the arguments."
No matter what Spencer rules, the drama won't end when his gavel comes down. If there is an injunction, some analysts expect that a settlement will be put in place. And RIM has vowed to keep its service up and running by making a software fix, a so-called workaround, that it says won't infringe on any patents (see BW Online, 2/10/06, "Inside the BlackBerry 'Workaround'").
Patricia Wilkey has had to prepare for all possibilities. Adapting to an injunction and a workaround would mean looking at usage piecemeal, Wilkey says. Last week, she did a survey at EDS to find out who is using BlackBerries and how they're being put to use. And she also has to look at what kind of BlackBerry servers she has in place, since she's unsure whether the workaround requires newer versions of RIM's server software.
Based on all those things, she -- and her customers who have also done surveys -- will make the hard decisions on whether to adopt the workaround or dump BlackBerry for another device.
Hard work or not, Wilkey just wishes all the guessing was over with. "One way or another just let us know, we all want to have it come to end and get on with business," she says. Until then, she'll have to keep watching the screens and awaiting the e-mails -- at least as long as her BlackBerry keeps running.