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RIM, NTP Come to Terms

Ending one of the most bitterly fought intellectual property disputes in tech-industry history, BlackBerry late Friday settled with NTP, which had claimed patent infringements.

The settlement follows by a week a hearing before U.S. District Judge James R. Spencer, who admonished both parties in his Washington, D.C., courtroom last week for not reaching a settlement. (See RIM Wins Reprieve.)

Under the agreement, announced by both companies today, RIM, maker of the popular Blackberry device, gains a license to mobile email technology covered by NTP-held patents. In return, RIM will pay NTP a lump sum of $612.5 million.

That figure is well below some estimates of the eventual settlement price for RIM, which had reached as high as $1 billion. NTP had also been granted a royalty on every Blackberry sold. RIM co-CEO Jim Balsillie had publicly rejected earlier demands from NTP to settle the case, calling them outrageous and objectionable and saying that NTP was demanding terms that would essentially allow it to take over RIM's business.

NTP sued RIM for patent infringement in 2001 and won a major judgment the following year; RIM's appeals had been rejected by every federal court that reviewed the case, and Judge Spencer clearly expressed his irritation with the Waterloo, Ontario, tech giant's delaying tactics. A courtroom victory for NTP could have caused the shutdown of the Blackberry service, which has 4.3 million users worldwide and has become an essential accessory for thousands of financial analysts, corporate executives, and government officials.

A settlement in the case was reached early in 2005 but was later set aside by Judge Spencer. (See RIM Ruling Foretells Changes.)

Even as Spencer was weighing arguments from both sides in the case, the U.S. Patent and Trademark Office issued final rejection of two of the five NTP patents at issue. All five of NTP's push email patents have been ruled invalid by the Patent Office in preliminary decisions, and most observers saw NTP's case against RIM weakening steadily.

Nevertheless, the patent dispute was clearly affecting RIM's business. Also today, the company released disappointing fourth-quarter results, with new net subscriber growth of between 620,000 and 630,000, well below the numbers forecast in December. (See RIM Flags Lower Earnings .) "The main reason for the decrease is that uncertainty surrounding the NTP litigation caused corporate and retail customers in the United States to defer Blackberry purchase commitments," the company said in a statement. "While some uncertainty was anticipated in December, the overall impact was greater than previously anticipated."

RIM is also facing increased competition from rival device makers and service providers, including Palm, whose Treo device has found success with many enterprise buyers, and Good Technology Inc. , whose GoodLink software runs on a number of different devices.

— Richard Martin, Senior Editor, Unstrung

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