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Jury Vindicates Visto

Throwing the mobile email market back into patent-dispute hell, a federal jury in Texas issued a sweeping judgment against Seven Networks Inc. in the patent-infringement lawsuit filed against it by Visto Corp. Visto attorneys immediately filed a similar suit against BlackBerry , seeking an injunction and monetary damages against the maker of the popular BlackBerry email system and raising the specter of another drawn-out patent battle involving the mobile email devices that thousands of users in corporations and governments have come to rely on.

The jury in the Visto v. Seven trial deliberated for five hours before finding for the plaintiff on five claims relating to three separate patents. Visto co-founder Daniel Mendez claims to have invented the technology behind most of the mobile-email programs in the market today, although Visto has also signed a license agreement with NTP Software, the company that pursued a protacted patent-infringement case against RIM that was settled for $612.5 million in early March. (See RIM, NTP Come to Terms.)

Work-around planned
"We labored for 10 years on this technology, and to have such an overwhelming jury verdict is extremely gratifying, and very emotional for me particularly," Mendez tells Unstrung. "They gave us everything we asked for."

The verdict calls for monetary damages of 19.75 percent royalties on Seven's revenues from its mobile email product over the period specified in the suit, which would total $3.6 million. Mendez, however, says Visto is under no obligation to grant a license and will seek an injunction that would bar Seven from selling its products in the United States. He declines to comment on whether the two companies are in negotiations on a license agreement.

Seven issued a statement this morning pointing out that the ruling will not affect Seven customers, for now, and that two of the Visto claims upheld by the jury have been struck down in preliminary rulings by the U.S. Patent and Trademark Office. Like RIM, Seven asserts that it has a "work-around" solution that will avoid any threat of patent infringement.

"We believe minor alterations of the software will avoid the claims in the future, with no disruption to our customers or the user experience" said Harvey Anderson, Seven's senior vice president for corporate affairs and general counsel, in a statement.

Turning to the courts
The verdict marks the latest chapter in a lengthy series of patent disputes around mobile email technology, which has a tangled history with many purported inventors. Mendez emphasizes that Visto should not be lumped with NTP Software, which never developed nor sold a product based on its patented technology. But some observers assert that, facing formidable competition for enterprise mobile email customers, Visto is turning to the courts, rather than the market, to succeed. Visto also has patent-infringement suits pending against Microsoft Corp. (Nasdaq: MSFT) and Good Technology Inc.

"I don’t understand what Visto is doing here except not focusing on customers, instead focusing on lawyers," says Bob Egan, research director for emerging technologies at TowerGroup. "My sense is that the fact that a small company like Visto is embroiling themselves time and time again in the legal stuff causes many enterprise IT shops to shy away. Nobody will get fired for buying RIM -- but they could for buying Visto."

"That may be what some defendants like to believe, but we're an active company with over 400 employees in 10 different companies supporting some of the largest wireless operators in the world," countered Visto president and CEO Brian Bogosian in a conference call with reporters today. "We've developed 27 patents over the last 10 years, and, frankly, to ignore the fact that our competitors are blatantly misappropriating this intellectual property would not be serving our customers, employees, or investors. We have no choice but to defend our own innovations." (See Can't We All Just Get Along?)

Appeals of the verdict could last for months, if not years. RIM officials were not available for comment on the new suit filed by Visto; but it's clear that the prospect of another lengthy court fight over wireless email patents will not serve the BlackBerry maker or its customers.

"I can not predict what RIM will do," says James Wallace, the Washington, D.C., patent attorney who represented NTP in its battle with RIM. "But the lesson of the NTP v. RIM battle is that it is always prudent to take patent suits seriously and to explore reasonable settlement at an early stage."

— Richard Martin, Senior Editor, Unstrung

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