The Patent Dispute
Patent law can be tricky, and the claims companies make in their patents can be hard to quantify. But here is the basic dilemma that RIM and the BlackBerry were facing -- NTP Incorporated holds several patents for wireless e-mail technology. RIM's push technology is similar to, but more complex than, the technology NTP has patented. NTP had accused RIM of patent infringement, and judges and juries agreed. The patent dispute and a delayed rollout of new BlackBerry models caused a slight slowdown in RIM's rapid growth.
The dispute between NTP and RIM started in 2001, when NTP sued RIM. Courts have generally ruled in NTP's favor, granting monetary settlements and injunctions against RIM. RIM, however, has appealed the rulings and had requested a review of NTP's patents. The United States Patent and Trademark Office (USPTO) has overturned several of the patents in question.
In November of 2005, a United States district judge ruled that a previous monetary settlement between the two companies was not enforceable. On January 23, 2006, the United States Supreme Court turned down RIM's request to review the district court ruling. The big concern was that this decision would lead to an injunction prohibiting BlackBerry sales and service in the United States. The U.S. Department of Justice requested a 90-day stay for essential government employees in the event of an injunction. RIM suggested the possibility of a software work-around that would not infringe on NTP's patents, and RIM and NTP began negotiations through a court-appointed mediator.
RIM and NTP have settled their dispute. The cost -- $612.5 million. The result -- NTP grants RIM a license to NTP's patents. According to a press release issued by both companies on March 3, 2006, here's the agreement:
"The licensing and settlement agreement relates to all patents owned and controlled by NTP and covers all of RIM's products, services and technologies. NTP grants RIM an unfettered right to continue its business, including its BlackBerry® related business. The resolution permits RIM and its partners to sell RIM products and services completely free and clear of any claim by NTP, including any claims that NTP may have against wireless carriers, channel partners, suppliers or customers in relation to RIM products or services, (including BlackBerry Connect and Built-In technology), or in relation to third party products and services, to the extent they are used in connection with RIM products and services."
Next, we'll look at the BlackBerry's hardware and software.