BlackBerry users will need to stay on the edge of their seats a little longer. A U.S. federal judge -- on whose shoulders rests the fate of the popular e-mail service -- held off on a decision whether to shut down BlackBerry service across the country.
U.S. District Judge James Spencer did say that Research In Motion (RIMM), which runs the wireless paging service, has indeed infringed on patents held by Virginia-based holding company NTP. As to an injunction that would require RIM to shut the service, a decision on that will come as soon as possible, he said Feb. 24.
The news caused BlackBerry users around the U.S. to breathe a sigh of relief -- at least for now.
ONGOING BATTLE. But the matter is far from decided. The decision could come any day now, and it is not expected to be good for RIM or its 3.2 million U.S. subscribers. If the injunction is handed down, users will have 30 days before the plug is pulled, and pressure on RIM to negotiate a settlement with NTP will skyrocket. The two sides had reached a tentative agreement last year, but it later unraveled.
RIM executives have sought to reassure customers by coming up with an alternate arrangement, a so-called workaround that would enable service to continue without infringing on patents (see BW Online, 2/24/06, "RIM'S Biggest Day in Court").
The dispute erupted in 2001, when NTP, a patent-holding company, first sued RIM, alleging that the Canadian outfit's wireless e-mail technology infringed on patents held by NTP.
TWO SIDES. NTP issued a statement late Friday afternoon in which it sought to turn up the heat on RIM to settle: "We want all BlackBerry users to know that we have repeatedly attempted to settle this issue with RIM, including trying to meet with them this week. Contrary to RIM's public stance, we always have and continue to offer RIM a license that fully protects everyone -- its customers, carriers, and partners. RIM has rejected our efforts, stalled the proceedings and attempted to undermine the process every step of the way. We have acted to protect our interests and will do so in the future as should all patent owners."
RIM co-CEO Jim Basillie remained defiant in a statement issued late Friday, saying he was "very pleased that NTP's charade was finally exposed to the court," and describing NTP as having been "very disingenuous with the court and the public." He added that, "We're looking forward to the eventual decision, and we're feeling comfortable with our contingency plans in any event."
Balsillie also took issue with NTP's claim that it had offered RIM a workable settlement agreement. "RIM filed an affidavit from a leading licensing expert that unambiguously explains that NTP's settlement offer is disingenuous and illusory. NTP wants the world to believe they're being reasonable in order to limit the public outrage, but the truth was exposed in court today."
PLAYING INTO PALM. Despite RIM's assurances, uncertainty about the future of the BlackBerry is playing into the hands of rivals, most of all Palm (PALM), which makes the Blackberry's biggest rival device, the Treo 650 and Treo 700. Both devices are smart phones with thumb-operated keyboard similar to that of the BlackBerry. One of the handhelds runs the Palm operating system that evolved from the original PalmPilot handheld device; the other runs Microsoft's (MSFT) Windows Mobile operating system.
In the corporate environment, Palm's Treos are often paired up with Goodlink, a server software from Good, a privately held firm based in Santa Clara, Calif. Its software works with devices from Palm, Motorola (MOT), Nokia (NOK), and many others. Good's president and CEO Danny Shader wonders why RIM hasn't settled yet. "We modeled all the different scenarios, and we think the judge wants the parties to settle. We'd like them to settle because that would benefit the market," he says. "The market isn't benefiting from all the uncertainty. From our perspective the damage is already done. RIM has indicated to its customers that it's willing to play chicken."
Good doesn't publish its financial details, but Shader says the company has seen a steady increase in business as RIM's legal fight with NTP has worn on. "Last year at this time we had 4,000 companies using our software," he notes. "Now we have 8,000." Good has quarreled in the courts with RIM, but settled those cases.
RIM may need to be equally accommodating in its legal battle with NTP.
Hesseldahl is a writer for BusinessWeek Online in New York
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