Another Mobile Email Spat

As if things weren't complicated enough in the mobile email legal department, the case filed last week by Visto Corp. against Microsoft Corp. (Nasdaq: MSFT), over features in its new Windows Mobile 5.0 operating system, has further muddied the waters surrounding intellectual property for the popular technology.

Visto filed suit against Microsoft the same day it inked an agreement to license patents held by NTP, which itself is engaged in a protracted legal struggle with BlackBerry , maker of the popular BlackBerry devices. (See Visto Licenses NTP Patents.) Visto's fight with Microsoft brings to at least three the number of patent disputes around mobile email technology:

  • More than two years ago Visto sued rival Seven Networks Inc. for infringement of four patents related to Visto's wireless messaging technology. That case is expected to go to trial in early 2006. Visto co-founder Daniel Mendez declines to comment on any ongoing settlement talks between the two companies but says he does not expect a pre-trial settlement.

  • Visto filed suit on Dec. 14 against Microsoft in the same Marshall, Texas, federal district court where its infringement case with Seven is being heard. The suit calls Microsoft's Mobile 5.0 software, which is expected to be included in several new handheld messaging devices coming out from makers like Nokia Corp. (NYSE: NOK) and PalmOne Inc. (Nasdaq: PLMO) in the first half of 2006, "a blatant infringement on Visto's patented technology." Visto's decision to file suit, Mendez says, was influenced by concerns over Microsoft's recent decision to bundle Windows Mobile 5.0 with its dominant Exchange server software. No settlement talks with Microsoft have taken place, he adds.

  • Research in Motion, whose BlackBerry handheld launched the mobile messaging revolution when it was released in 1998, has been embroiled in a legal battle with NTP, which holds several patents for wireless email, for four years. A series of recent rulings have strengthened NTP's case, observers believe, and increased the possibility of an injunction that could shut down RIM's service, stranding millions of users. (See Users in Blackberry Jam.) RIM could lose the court case despite preliminary rulings from the U.S. Patent and Trademark Office invalidating the NTP patents. A final decision from the USPTO is not expected for several months.
These ongoing disputes follow previously settled fights between Visto and Intellisync Corp. (Nasdaq: SYNC), and between RIM and Good Technology Inc. , which was settled last year. They also reflect intense IP conflicts in the wider wireless industry, as startups scrambling to survive turn to the courts, rather than the marketplace, to validate their technology and business models.

For users of the highly addictive mobile devices, the industry's legal imbroglios only raise uncertainty and could slow the rapid rollout of wireless handheld messaging, particularly for mission-critical business applications. (See RIM Ruling Foretells Changes.)

The legal fights, says Bob Egan, research director for emerging technologies at the TowerGroup, "bespeak this trend in the market where the interests of investors are placed ahead of those of real customers. It displays the arrogance of many of the executives involved, which frankly disserves the overall growth of any particular market where these battles are being waged. They polarize market growth and create lots of uncertainty."

Mobile email has been especially vulnerable to intellectual-property storms because the patents developed by the founder of NTP, Thomas Campana, went unused for years before BlackBerries took off in the late 1990s. Now, with mobile email exploding and dozens of new products coming out from both startups and large manufacturers, patent holders NTP and Visto are attempting to either profit from their original designs (in the case of NTP), or block new products from competitors (as with Visto).

"The industry always has been and continues to be highly litigious," responds Danny Shader, founder of Good Technology, in an email today. "That's never good for anyone; it takes focus away from customers and innovation."

Worst of all, the current lawsuits may only presage IP disputes to come. If RIM, as expected, reaches an expensive settlement agreement with NTP, "I hate to think about the possibilities of RIM trying to recoup its losses by using the NTP patents against everyone else," says Todd Kort, principal wireless analyst with Gartner Inc. , "but I suppose that this is what NTP will do anyway, once they dispose of RIM."

Ultimately, there may be no clear winner in the patent wars. The losers, though, may well include RIM and frustrated customers looking for reliable mobile messaging technology.

Egan says it's clear the market senses RIM's vulnerability: "It's the high-tech version of backroom politics, with guys in a room smoking big cigars trying to figure out who's going to be the next king."

— Richard Martin, Senior Editor, Unstrung

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