RIM BlackBerry Could Face Shutdown
A federal judge refused to enforce a $450 million settlement between Research In Motion and NTP on Wednesday. Also, a request by the BlackBerry maker to stay proceedings until the U.S. Patent Office rules on the validity of NTP's patent was denied, which could mean trouble for the popular wireless service.
U.S. District Judge James Spencer had indicated earlier this month that his patience was running thin in the dispute between the two companies, and planned to rule swiftly on whether the settlement could be enforced.
On Wednesday, RIM's hopes for a decision in its favor all but disappeared. "The court finds the parties do not have a valid and enforceable settlement," the ruling read. "RIM's motion to enforce the parties' settlement agreement is denied."
By virtue of the decision, NTP can now proceed with enforcing the injunction first granted by Judge Spencer in 2003. However, most industry insiders believe that RIM will be forced to settle with NTP in the meantime if it has any chance of surviving as a company; 70 percent of its sales come from U.S. customers.
Intellectual property attorneys say the ruling is not all that surprising. In order for a settlement to be enforced by the court, it has to be clear that both parties agreed to its terms. But in this case, since negotiations broke down, obviously there was no such agreement.
"This ruling will almost certainly force the parties back to the bargaining table -- both have too much to lose," says Robert Andris, attorney with Ropers Majeski Kohn & Bentley of California. "NTP risks losing an established source of future revenue in the form of royalties from RIM, and RIM risks an injunction that could shut the company down all together."
To its defense, RIM says that injunctive action would be inappropriate. However, if it does occur, the company says it is ready to ensure the BlackBerry system remains operational.
"As a contingency, 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," the company said in a statement.
RIM maintains that it believes a ruling by the U.S. Patent Office in its favor will occur within months, but Spencer said the court is not obligated to wait for such a decision. Spencer added that he wasn't convinced such a judgment was as imminent as RIM indicates.
Rob Enderle, analyst with the Enderle Group, said now is the best time for the two companies to settle their differences, or risk damage to both organizations.
"From here on the value of NTP's position will begin to decline along with RIM's chances of survival as a company," Enderle said. "It would be wise for both companies to find an agreement they both can live with so that the fight doesn't destroy what otherwise could still be a lucrative future for both NTP and RIM."