Technology

RIM's Latest Patent Problem


If the lawsuit filed on May 1 by wireless-messaging concern Visto against Blackberry maker Research In Motion looks familiar, it's no accident.

Visto, you may remember, is one of the companies that sought to profit on the long-running patent battle between Canada's RIM (RIMM) and the Virginia holding company NTP. In that case, NTP asserted that its patents predated RIM's and sought an injunction that could have shut down the popular Blackberry wireless e-mail service in the U.S. Ultimately, the two companies settled, and RIM coughed up $612.5 million to make the suit go away.

Visto had been fighting in court with a smaller wireless-messaging company known as Seven Networks, in a conflict that in many ways mirrored the RIM-NTP litigation: Visto asserted patent infringement on wireless-messaging technology and sought to close Seven down.

VICTORY IN COURT. On May 1, Visto announced it had prevailed in court and that it would be awarded $3.6 million or the equivalent of 19.75% of its revenue. Seven said it was awaiting the outcome of a re-examination of the patents, and said business would not be disrupted in the short term. It also said it would have a non-infringing version of its messaging service available later this year. Seven also has a countersuit pending against Visto that is expected to come to trial next year.

Boosted by the momentum of its win against Seven, Visto promptly filed a patent lawsuit against RIM in a U.S. District Court in Texas. It's seeking an injunction and monetary damages for the infringement of four patents, three of which had been part of its suit against Seven. Visto has also filed patent-infringement suits against Microsoft (MSFT) and Good Technology, which both provide wireless e-mail technology.

Visto CEO Brian Bogosian has previously portrayed the lawsuit against Seven as aimed at putting the company out of business. When asked if he'd like to do the same thing to RIM, he said: "Absolutely. But that doesn't mean there's not a deal to be done. We want them to stop misappropriating our intellectual property."

LEGAL THRILLER. The legal battle promises more plot twists than a John Grisham thriller. NTP holds an equity stake in Visto, as part of a deal announced on Dec. 15 in which Visto took out a license for NTP's patents. In other words, NTP, after getting more than a half-billion dollars from RIM, is once again party to a lawsuit to squeeze cash out of the Canadian company for patent infringement.

Bogosian says there's no connection between the NTP stake in his company and his new fight with RIM. He says he'd be suing RIM even if NTP didn't have the minority stake. "There is nothing about the NTP stake that has anything to do with this matter," Bogosian said.

RIM dismissed the lawsuit in a statement issued Monday afternoon, saying it "has been monitoring Visto's litigation against other companies in the industry and, based on prior art and actual products in market, RIM believes Visto's patents are invalid." RIM also said the patents asserted in Visto's case against Seven concern a different type of wireless technology, and that, as such, RIM's technology doesn't infringe on Visto's patents.

"LAST MAN STANDING." RIM also said that it doesn't expect customers to be affected by the latest lawsuit. It may be trying to reassure its users that this legal skirmish won't have the high stakes and long-running drama of the NTP battle. Still, that wasn't enough to assuage the concerns of investors, who pummeled RIM stock. Its share price dropped $3.60 on Monday, or more than 4%, closing at $73.03.

Bogosian says he intends for Visto to be the "last man standing" in the wireless-messaging market. He also hinted that the privately held company could have a stock offering on the horizon. "This isn't about who sells more e-mail to which kinds of wireless devices," he said. "This is about the battle of the next desktop, and Microsoft and Nokia (NOK) and RIM are all jockeying for position. We expect to be the only ones standing in the next year and half, and with a very large market cap."


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