Doomsday came a little closer this week for Research In Motion, as a court ruled that the company must pay aggravated damages of $53 million to NTP Inc., a patent holding company based in Virginia. A judge stayed an injunction against RIM that would have prevented it from selling the Blackberry device and services in the United States.

Lawsuits have been in Motion since early 2000, when NTP first notified RIM of the alleged infringement. In November a court ruled against RIM, and ordered it to pay $23 million. Then NTP turned the screw, claiming RIM had wilfully violated the patent. The Canadian company has been budgeting for damages by setting aside money in an escrow fund.

RIM has cried foul to the US Patent Office. Four of NTP's 'Campana' patents are being re-examined by the Office, the agency announced in February. NTP acknowledges that RIM did not copy the Campana patents but developed its software independently. However a Judge was not impressed by RIM's sloppy defense - or its "questionable legal tactics", which made the discovery process "unnecessarily arduous".

RIM cited three examples of prior art, but its expert witness did not impress the judge: "Much of Dr.Reed's direct testimony was conclusory and failed to analyze and explain the claim language and which components of the prior art embodied each element of the asserted claims."

He continued, "Dr.Reed's credibility may have discounted by the jury in light of his admission that his testimony was scripted and substantial portions of his expert report were copied, almost verbatim, from ... answers prepared by RIM's attorneys."

And according to the judge, RIM "attempted to confuse mislead the jury by conducting a demonstration of the TekNow! system, which RIM asserted as prior art, by using updated software that did not exist at the time the system was used".

Ouch.

RIM has changed its business model since the NTP's first notification in January 2000. From being a pager company RIM has morphed into a software company that uses industry-standard cellular air interfaces, adding voice capabilities to the devices. RIM has licensed the gateway to Nokia, Symbian and Palm although license revenue represents a trickle just now: the company spent more on legal fees in the last quarter than it gained from licenses.

Last week RIM sued Xerox as a precaution. Litigation against Good continues. ®

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