Court Denies RIM a Break on Sales Ban
SAN JOSE, CALIFORNIA -- The Supreme Court will not delay NTP's patent infringement case against Research in Motion (RIM) while the court considers whether to hear RIM's appeal, sending the case back to a lower court in Virginia that might halt the sale of BlackBerry devices in the U.S.
RIM has been fighting to appeal a 2002 jury verdict that its BlackBerry wireless e-mail devices infringe upon patents held by NTP. At the time, the U.S. District Court for the Eastern District of Virginia slapped an injunction on the BlackBerry devices, but stayed that injunction pending an appeal. The Court of Appeals for the Federal Circuit dashed RIM's hopes of overturning the verdict in December 2004, and denied subsequent requests to revisit that decision, but instructed the Virginia court to review certain aspects of the case before the matter could be decided.
With no other avenue available, RIM appealed to the Supreme Court earlier this month. The country's highest judicial body has not yet decided whether to hear RIM's appeal, but did deny RIM's request for a stay in the case pending a possible appeal, NTP announced Wednesday.
RIM later issued a press release confirming the Supreme Court's decision to follow what RIM called its "normal course" of letting all of the outstanding litigation proceed before making a decision on whether to hear the appeal. That process could take months, RIM said.
When it appealed, RIM said it did not expect the Supreme Court to hear its case. However, the company hoped to bring attention to some of the issues presented by the fact that RIM is based outside the U.S., in Waterloo, Ontario.
The federal appeals court overturned one of the decisions against RIM that related to the way it runs the BlackBerry e-mail system, because the primary location from which that network is coordinated resides in Canada. But the appeals court otherwise agreed with the original verdict's finding that the BlackBerry devices themselves infringe on NTP's patents, and said since the devices are sold in the U.S. the relevant patent laws apply.
The original injunction against the BlackBerry devices was vacated by the appeals court because of issues still to be resolved by the Virginia court. The lower court must revisit the part of its ruling regarding the BlackBerry system as well as a dispute over some language in one of NTP's claims before the matter can be finally settled. Lawyers from NTP have indicated several times since last December that they intend to seek a new injunction once the case returns to Virginia.
The Virginia court must also consider the short-lived settlement agreement between the companies. RIM and NTP thought they had settled the case themselves earlier this year, announcing an agreement that would grant RIM a license to NTP's technology in exchange for $450 million. However, that agreement fell apart, with RIM believing the companies had come to a final agreement while NTP was under the impression that no binding agreement had been reached. RIM will ask the lower court to enforce the terms of the agreement, it said earlier this year.
The U.S. Patent and Trademark Office has also injected some uncertainty into the case. That organization has issued preliminary orders revoking NTP's patent claims, but NTP is allowed to appeal that decision, which could take months to resolve.
In what is becoming a routine event when news emerges surrounding this case, the Nasdaq stock market halted trading in RIM's stock (RIMM) after a sharp decline in Wednesday afternoon trading. The stock was down $3.71, or 6.46 percent, to $53.69 before trading was halted.