US BlackBerry service faces shutdown
12.16.05
By Rhys Blakely and Agencies
The BlackBerry service, based on the handheld e-mail device that has become a must-have tool for the business elite, could be shutdown in the United States after a bitter legal battle over a key patent.
This week, NTP, a small firm that holds a crucial patent that allows e-mails to be sent to mobile devices, announced a licence agreement with Visto Corp – an arch-rival of Research In Motion. (RIM), the company that created the BlackBerry. The announcement could put further pressure on RIM to settle a patent claim from NTP which could be worth up to $1 billion (£565 million), or face having its service shut down altogether.
With neither side apparently prepared to concede any ground, the dispute seems set to continue. “It sounds like a little bit of Russian roulette,” Carl Tobias, a law professor at University of Richmond, told AP.
Visto has also took out a legal writ against Microsoft, accusing the company of infringing patents. Visto said it is seeking a permanent injunction to stop Microsoft from “misappropriating” technology developed nearly ten years ago by Visto and its co-founder.
To avoid similar litigation, RIM competitors including Nokia and Good Technology have drawn up licence agreements with NTP, which is based in Arlington, Virginia. In addition to signing its deal with Visto, NTP bought a stake in the company, which licences its mobile e-mail technology to Sprint Nextel and Vodafone, the British-based telecoms company.
If a court orders a shutdown of BlackBerry’s service, it is likely to give users just 30 days’ notice to switch to other devices.
In the meantime, RIM’s share price has plunged 21 per cent this year amid growing concerns from users. RIM has 3.65 million BlackBerry subscribers, most of them in the United States. Competitors such as Nokia and Palm are already looking to grab sales from the market leader.
A federal jury in Richmond backed NTP’s patent claim in 2002. Since then, RIM’s appeals have failed and a $450 million settlement has unravelled. RIM is now relying on separate proceedings by the US patent office, which has preliminarily rejected the patents at issue, but is awaiting a court decision.
James Wallace, a lawyer for NTP, says he plans to argue in federal court in Virginia that these deals show there are available options for customers in the event of an injunction against RIM.
Although some industry observers believe NTP has no financial incentives to force a shutdown, lawyers for the company have claimed otherwise.
“I understand that theory, and when BlackBerry was the only game in town, there was a certain logic to it,” Mr Wallace said.
Mark Guibert, vice president of corporate marketing for RIM, said that he thinks most people will see through Visto’s “timing and rhetoric.”
“This is a small player looking for free publicity through a last-minute licence with undisclosed terms for patents that have been rejected by the patent office,” he said.
Meanwhile, customers have complained of being left in the dark over the future of the BlackBerry service.
Officials with Northwest Airlines were worried enough to demand a recent meeting with RIM.
Although the airline said it was satisfied with RIM’s information, it also noted that it had identified alternative suppliers and was continuing to monitor the BlackBerry situation to ensure service would not be interrupted.
In a statement, RIM said it was speaking directly to customers and partners to explain the patent office’s decisions and to “assure them that we have prepared a contingency plan to implement a software workaround should it eventually become necessary.”