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BlackBerry Dodges Injunction

A U.S. judge hearing a patent case delays ruling on whether to shut down the wireless service. He is pressing for a settlement, experts say.

February 25, 2006|James S. Granelli | Times Staff Writer

Compulsive BlackBerry users, rejoice -- for now.

The addictive mobile e-mail devices will continue to interrupt conversations and distract Type As from their kids' soccer games while the federal judge in a patent dispute decides whether to shut down the service.

But U.S. District Judge James R. Spencer reiterated his long-standing threat of a shutdown, saying during a hearing Friday that he was surprised and disappointed that BlackBerry maker Research in Motion Ltd. had not settled the case with technology firm NTP Inc.

NTP, which won a 2002 jury verdict finding that Research in Motion had infringed five patents, wants the judge to block U.S. sales and e-mail service of the device, nicknamed CrackBerry by addicted users.

The judge may issue such an order as early as next week. Lawyers watching the case said it was clear that he was trying to force the two sides to negotiate.

"The judge desperately wants the two parties to settle this," said Washington patent lawyer Bob Yoches. "What he's essentially saying to each side is: How good a gambler are you?"

Although NTP has the legal advantage, it is under pressure to settle. The U.S. Patent Office has issued preliminary or final rejections of all five patents. That includes a final rejection issued Friday. NTP can appeal final rejections.

In addition, the U.S. Supreme Court is considering whether to bar automatic injunctions as a remedy in patent cases, especially those in which money can compensate for wrongdoing.

But Spencer isn't waiting for the high court to rule.

Research in Motion "has dodged a bullet today," said Brian Ferguson, another Washington patent lawyer. "But it's very clear the bullet is coming their way."

A settlement could be reached in an afternoon, Ferguson said, but both sides have dug in their heels so far that if either gives an inch, "it will be seen as a capitulation."

Last year, a tentative $450-million accord fell apart. NTP now wants $126 million for past damages and, reportedly, about $1 billion to settle future claims.

Spencer could fashion an order that neither side likes, but the burden probably would fall much more on Research in Motion, which counts 3 million U.S. BlackBerry users among its 4.3 million customers worldwide and controls 50% of the market.

Industry analyst Eugene Signorini of research firm Yankee Group said that regardless of what happened Research in Motion was taking some hits in customer relations. A plan to work around the patents by sending new software to customers would be difficult and time-consuming to achieve, and there probably would be glitches, he said.

"The company has always been reliable, but this work-around is going to call into question their ability to remain reliable," Signorini said.

In addition, he said, chief rival Palm Inc., with 30% of the market for wireless e-mail devices, is pushing hard to win customers for its Treo handset, and market newcomer Nokia is selling devices that use Microsoft Corp. software.

If Spencer imposes an injunction, the effect probably would be delayed for 30 days to give Research in Motion a chance to work around the patents and possibly appeal the decision. It also would give customers a chance to decide what to do.

Large companies and governments are major BlackBerry users. Consultants have been advising them to develop a backup plan and wait until necessary before switching.

Westside real estate agent and BlackBerry addict Michael Eisenberg said he'd "take a pill" and go to his cellphone carrier to find something else if the judge shut down the service. "I'm the poster boy for BlackBerry. I live by it," he said. "I've got the BlackBerry callus on my thumbs."

Eisenberg, who brokers multimillion-dollar homes and uses his BlackBerry for such tasks as closing deals and buying on EBay, is frustrated by the long-running dispute.

"It's all about money, isn't it?" he said. "So just pay them."

Research in Motion Chairman Jim Balsillie said the company's arguments "give the court a lot to consider," especially on how an injunction would harm the public interest. He also said the company was able to show that NTP's settlement offer was "disingenuous and illusory."

NTP lawyer James H. Wallace Jr. said the judge's closing comments summed up NTP's position when he said that the "unfortunate reality" for Research in Motion was that a jury had found that it not only violated NTP's patents but also did so willfully.

The judge said he was "surprised, absolutely surprised" that the companies had failed to settle their dispute and had left its resolution in the hands of the court. "I've always thought," he said, "that this in the end was really a business decision."

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