- The Washington Times - Friday, March 3, 2006

Research In Motion Ltd., the maker of the BlackBerry e-mail device, announced yesterday it has settled its long-running patent dispute with a small Arlington firm, averting a shutdown of the BlackBerry system.

RIM has paid NTP Inc. $612.5 million in a “full and final settlement of all claims,” the companies said.

The settlement ends a period of anxiety for many of the more than 3 million BlackBerry users in the United States. Uncertainty over the outcome had customers wondering whether they would experiences brief outages or even a shutdown.

“I’m relieved,” said Matt Lattman, a management consultant in Boston. “I’ve had [a BlackBerry] for about a year, and at this point, I can’t imagine life without it.”

At a hearing Feb. 24, NTP had asked a federal court in Richmond for an injunction blocking the continued use of key technologies underpinning the BlackBerry wireless e-mail service.

At the hearing, Judge James R. Spencer expressed impatience with RIM and urged a settlement.

“He basically questioned the sanity of RIM, and said it wasn’t acting very rationally,” said Rod Thompson, patent lawyer at Farella, Braun and Martel in San Francisco. “His prodding of the parties worked.”

The settlement is on the low end of expectations, Mr. Thompson said, especially since RIM will not have to pay any future royalties. There also had been talk of NTP receiving a stake in RIM.

Shares of RIM shot up $12.08, or 14 percent, to $84 during after-hours trading, when the settlement was announced. They had closed 53 cents higher at $71.92 in regular trading on Nasdaq.

NTP was co-founded by Thomas Campana Jr., an engineer who in 1990 created a system to send e-mail between computers and wireless devices. Mr. Campana died in 2004. He is survived by his wife, who owns a large stake in NTP.

RIM said Thursday that it had added 620,000 to 630,000 new subscribers in the fiscal fourth quarter, which ended last month, below the 700,000 to 750,000 it had estimated in December. It blamed the shortfall on unexpectedly high uncertainty among customers about the litigation.

The prospect of a court-ordered halt to service prompted the U.S. and Canadian governments to get involved in the dispute. Canada unsuccessfully challenged the infringement finding, and the U.S. said it was concerned a shutdown would interfere with critical communications.

Members of Congress were so concerned by the prospect of a shutdown that they wrote to the director of the U.S. Patent and Trademark Office, which is separately examining the validity of the NTP patents.

RIM had assured users it had developed software to work around NTP’s patents. But because few details were released, analysts and some corporations expressed concerns about the viability of the technology and the legal ramifications of adopting it.

With a settlement, RIM will be able to avoid any of the headaches associated with introducing the new technology. Even if the software worked, it too might have been challenged by NTP, introducing yet another twist to the complicated and long-running case.

In arguing against an injunction, RIM’s attorneys had stressed the public interest in keeping its service running.

Government and emergency employees would have been exempt from the BlackBerry ban, but sorting them from other users would have proven difficult and problematic.

RIM’s attorneys also noted that the U.S. Patent and Trademark Office, in a proceeding parallel to the Virginia case, was poised to finally reject all patents at the heart of the case.

RIM, which is based in Waterloo, Ontario, had put $450 million in escrow, the amount of a settlementlast year that later fell apart. RIM will record the additional $162.5 million in its fourth-quarter results, it said.

Judge Spencer first issued an injunction in 2003 but held off on its enforcement during RIM’s appeals. After those efforts largely failed, the case returned to the judge.

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