James L. Balsillie said that BlackBerry service would continue even if his company had to change some of the operational details. Lindy Keast Rodman/Richmond Times-Dispatch, via Associated Press.
February 25, 2006
By JOSHUA BROCKMAN
RICHMOND, Va., Feb. 24 — Owners of BlackBerry wireless e-mail devices can continue to use them, at least for now.
A federal judge Friday declined to immediately stop the service, which is at the heart of a long-running patent dispute. That gave another reprieve to the company that makes the BlackBerry, Research in Motion, and its estimated 3.2 million customers in the United States.
Judge James R. Spencer of Federal District Court in Richmond expressed disappointment that Research in Motion and the company that is accusing it of infringing on its patents, NTP, had not been able to reach a settlement.
“I am absolutely surprised that you have left this incredibly important and significant decision to the court,” he said toward the end of an almost four-hour hearing on whether to issue an injunction, which would halt the use of the service in the United States. “I have always thought that this decision, in the end, was a business decision.”
The judge did not give a timetable for ruling on the injunction, nor did he indicate which way he might be leaning, saying only that any legal decision would be imperfect. He said he would first rule on damages owed by Research in Motion stemming from a jury verdict in 2002 that found that it had infringed on NTP’s patents.
The hearing capped a week of verbal jousting between the companies. It came on the same day that Research in Motion, which is based in Waterloo, Ontario, said that it had received a final rejection notice from the United States Patent and Trademark Office covering one more of the NTP patents at the center of the case. That decision, the company said, means all three NTP patents that are still related to the lawsuit have been found invalid.
NTP plans to appeal its findings to the Patent Office Board of Appeals. If the company disagrees with that body’s finding, it can take the issue to the federal court. The appeal process could continue for months, if not years.
Judge Spencer, however, has said the appeals will not influence the progress of the case he is overseeing.
“You’ve got this real disconnect between the skepticism that the patent office has shown toward NTP’s applications and the judge’s willingness to take these patents and give them a really broad interpretation,” said Josh Lerner, a professor at Harvard Business School who has followed the case.
During the hearing, Judge Spencer heard arguments from lawyers for both companies, as well as from a Justice Department lawyer, John Fargo, who represented the government’s interest in the case. Many federal agencies use BlackBerry devices, as do police and fire departments, not to mention bankers and brokers.
NTP asked the court for $126 million in damages and an immediate injunction on existing users, with the exception of government and emergency personnel, as well as a halt to new sales and service.
“We want to keep you in business,” said James H. Wallace Jr., who represented NTP. “It’s just time to pay up. What we’ve got here is a squatter.”
In the event of an injunction, Research in Motion has a workaround solution that would require close to two million hours to carry out, said Henry C. Bunsow, one of the company’s lawyers. “NTP’s request for an injunction should be denied,” he said. “It will frustrate the public interest.”
Although Judge Spencer said the case should have been settled, he made it clear that he would accommodate the concerns of the Justice Department. “If an injunction is ordered by the court, I want to make very sure that these exclusions and exemptions are met,” he said.
After the hearing, James L. Balsillie, the chairman and co-chief executive of Research in Motion, sought to give assurances that the BlackBerry devices would continue to work.
“We have to plan our life that we go ahead with the workaround,” he said. “The cost is far less than any settlement.”
“No matter what, BlackBerry service will continue operating seamlessly,” he added.
Wall Street responded positively to the outcome of the hearing. Shares of Research in Motion rose $4.52, or 6.5 percent, to $74.05.
“The market hates uncertainty and it wants R.I.M. to put this issue behind it,” said John Slack, an equity analyst for Morningstar. “I think the fact that they didn’t get an injunction today is a positive.”
Ian Austen contributed reporting from Ottawa for this article, and Vikas Bajaj from New York.
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