Feds Hit NTP Patents, Again

The U.S. Patent and Trademark Office has issued another preliminary ruling invalidating mobile email patents held by NTP, which is engaged in a long-running intellectual property dispute with Blackberry maker BlackBerry .

The "non-final action," issued last Friday by the patent office, does not signal a final victory for RIM, but it could bolster the Waterloo, Ontario-based company's strategy of attempting to wait out the legal case being waged against it by NTP in hopes that the U.S. government will ultimately render moot all the NTP patents.

NTP sued RIM for patent infringement in 2002. A settlement in that case was reached early in 2005 but has since been set aside by U.S. District Judge James R. Spencer. (See RIM Ruling Foretells Changes.) NTP is almost certain to appeal the patent office's preliminary rulings, a process that could take a year.

"The Patent Office's latest rulings corroborate RIM's long-standing contention that the NTP patents are invalid," said RIM vice president of corporate marketing Mark Guibert in a statement, "and the rulings also demonstrate that the Patent Office is acting with special dispatch to address the court's concern and the public interest."

"Special dispatch" is critical to RIM because NTP has won an injunction, stayed pending appeal, that would shut down RIM's Blackberry service in the United States. Though analysts and corporate IT managers consider that a slim possibility, Judge Spencer has made clear his impatience with RIM's delaying tactics and his intention to issue a final ruling in the case without waiting for a decision from the patent office. (See Users in Blackberry Jam.) Final arguments from RIM and NTP are due January 15; a ruling from Judge Spencer could come as soon as early February.

The impasse may well force RIM to settle with NTP, likely for hundreds of millions of dollars.

"RIM wants to do the right thing and keep its customers happy," says Todd Kort, a principal analyst for wireless at Gartner Inc. "Even a temporary shutdown would be a shock to Blackberry users and stimulate many of them to immediately begin looking for alternative solutions."

While RIM's results have held steady in the face of the legal assault, investors have begun to lose confidence. RIM shares have dropped more than 22 percent from their year-long high. (See RIM Profit Up 33%.)

— Richard Martin, Senior Editor, Unstrung

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