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Optical/IP

Users in Blackberry Jam

As the Blackberry user community awaits a possible settlement in the patent dispute between Research In Motion Ltd. (RIM) (Nasdaq: RIMM; Toronto: RIM) and NTP, questions grow about the workaround solution that RIM says it has developed to avoid any potential shutdown of the popular mobile email service.

Those questions come in the wake of a tumultuous back-and-forth week in the four-year-old legal battle. Yesterday, the U.S. Patents and Trademark Office issued a preliminary ruling invalidating another of the patents held by NTP for the technology at the heart of RIM’s fast-growing mobile email business. (See RIM Ruling Foretells Changes.)

That ruling followed U.S. District Judge James R. Spencer’s rejection of RIM's bid to enforce a $450 million settlement reached with NTP last March. Considered a setback for RIM, the judge’s ruling is expected to drive RIM back into settlement talks with NTP, rather than risk shutting down the service that has become essential for thousands of mobile executives and salespeople.

After the ruling, RIM released a statement reiterating that it has developed a solution that will prevent outages of service to Blackberry customers, even if the company is forced to stop using technology allegedly based on the NTP patents.

“As a contingency,” the statement said, “RIM has also been preparing software workaround designs which it intends to implement if necessary to maintain the operation of BlackBerry services in the United States. Further details will be made available if such implementation becomes necessary.”

It’s the “further details” part that has many enterprise users worried.

“[RIM CEO] Jim Balsillie has talked about this a couple of times,” says Tower Group Inc. principal analyst Bob Egan, “But it’s vague and it’s been tested in very small focus groups. For large customers and suppliers, there’s definitely a lot of uncertainty associated with this solution.”

Those comments are echoed in postings on the BlackBerry Forum, an independent online message board for BlackBerry users.

“I contacted RIM about this, asking what plans where in place to provide service if this all goes bad for them,” wrote a forum member under the username “Northgull.” “RIM bucked my e-mail to one of its attorneys who simply referred me to their press releases. The lack of information forthcoming from RIM about this and ‘next-steps’ is very disconcerting to we end-users. I am already checking out a palmOne Treo 650. Businesses need good quality, reliable information and equipment to do their thing. RIM is not helping any of us by keeping their plans so secretive, in my opinion.”

Todd Christy, CTO of Waltham, Mass.-based Pyxis Mobile, which provides Blackberry-based mobile applications to Wall Street financial firms, is less concerned, if only because a shut-down would not help NTP in its effort to extract hundreds of millions of dollars from RIM.

“We don’t expect any service interruptions,” says Christy. For RIM, NTP and its customers, that would be a three-way loss in any interruption, he adds. “We have done some contingency planning; our customers are very risk-averse, and we explore other options. But RIM has been very forthcoming with us, making their CEO and other executives available, and they’ve been above board speaking with us and our customers.”

Many observers expect a settlement to be reached soon, regardless of any further rulings from the Patent and Trademark Office. “By playing this dangerous game of liars’ poker and truth-or-dare with the court," comments Egan, "RIM has not only created uncertainty and negative publicity with its clients, but it’s created exceptional opportunities and leveled the playing field for its competitors.”

According to postings on the Blackberry Forum, Blackberry users should make sure their systems are upgraded to at least version 4.0.2 to take advantage of the planned workaround, while a new release would be necessary for the 7750 models.

— Richard Martin, Senior Editor, Unstrung

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