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RIM Payoff Spells Trouble for Enterprises


NTP’s victory means more—many more—bad software patent lawsuits are going to be coming down the pike.

In the short run, business executives are breathing a little easier today because they know that their Research In Motion BlackBerry service is going to stay on. In the long run, enterprise customers are in for a world of hurt.

When RIM agreed to make a one-time payment of $612.5 million to patent troll NTP for a permanent license that covers all of NTPs wireless e-mail patents, it also gave the green light to every other louse with a patent, a lawyer and a need to cash in without the hard work of developing and marketing a product.

As this case has shown, you dont even need a good patent. All, I repeat, all of NTPs five patents had been given non-final rejections by the U.S. Patent and Trademark Office. Two of them had been given final rejections.

So why did RIM pay more than half-a-billion dollars for garbage?

It did so because Judge James Spencer made it clear to court-watchers that he was inclined to give NTP an injunction, which would have lead to BlackBerry services being turned off in the United States. For the company that makes its money from providing that service, the danger was just too high that it would quickly lose its customers to would-be competitors like Funambol,, Microsoft Microsoft and Palm.

RIM kept saying it had a workaround, but the customers werent buying this story. So, even though Jim Balsillie, chairman and co-CEO of RIM, was saying as late as February 24 that “settlement has never been an option to date,” a settlement was still possible.

Indeed, it always had been. While companies talk tough and see just how close they can come to striking the other sides hitters with high, hard fastballs, at the end of the game the vast majority of these kinds of cases are settled out of court.

As John Tredennick, CEO of CaseShare Systems and former litigation partner at the law firm Holland & Hart LLP, said as the case was heating up, “I believe RIM will blink and enter into a settlement that will allow it to continue its services. Litigation is about brinkmanship and eventually somebody blinks.”

What RIM did want though, and NTP had refused all along to give it, was a permanent license for the bogus patents. Without a permanent license, NTP could continue to stick RIM for years to come.

NTP, on the other hand, realized that if it did have the court stop the BlackBerry service, RIM would be less able to pay it big bucks in the future. Once it became clear that RIM wasnt going to pay NTP off without a license agreement, NTP finally gave them one—for an additional $162.5 million.

Not bad money for junk patents, dont you think?

Of course, this is not an ending. BlackBerrys are safe, but NTP can get back to its plans to shake down other companies. Hmm. I wonder if Microsoft has a deal in place with NTP for Microsoft Exchange 2003 Service Pack 2, which includes push e-mail support?

As Ive said before, this is all quite legal with our hopelessly awful software patent system. And, as NTP and the courts have just shown, its a great way to make money.

With this “victory,” we can only expect to see an even greater flood of patent trolls. In turn, this will mean higher costs for business technology users and less innovation.

After all, who wants to actually create something new and get sued for your profits when you can simply collect patents and wait for someone else to make something of them?

This may be a gold-letter day for BlackBerry users, but its a black-letter day for all technology users.

A version of this story was first published in eWEEK.

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