TechScape: Of RIM, NTP and BlackBerry Squash
Rant The other day in the FT, there was a small item about RIM (Research in Motion) the Blackberry’s manufacturer. Its headline blared, “RIM Faces Higher Payouts on Patents.”
Turns out, RIM “may have to pay-out $550m more than the $450m it has set aside to settle claims that its Blackberry email device infringes the patents of another company.
Now call me exceedingly gullible or something (though nobody has ever called me something), but I stupidly thought that RIM owned the IP rights free and clear to the Blackberry.
To recap, on 5 August, 2003 the US District Court issued a "Final Order" awarding almost $54m including post-judgment interest, compensatory damages and enhanced damages while finding "that NTP will face irreparable harm if a injunction is not issued".
This was more than two years ago.
The court also issued the injunction against RIM forbidding it to:
"indirectly or directly making, using offering to sell or selling within the United States any or the following products or services:
i. Blackberry Handheld Units (model numbers 850, 857, 950, 957, 5810, 6710, 6510, 6210, 6750)
ii. RIM's Blackberry "Corporate" Redirector Software (for Microsoft Exchange Server and Lotus Domino)
iii. RIM's Blackberry "Desktop" Redirector Software
iv. RIM's Blackberry "ISP" Redirector Software
and ... drum roll, please,
v. RIM's Blackberry Wireless E-mail Service in connection with any of the foregoing products.
Following the ruling, RIM went immediately to the US Patent Office which is tantamount to asking another student for help when you, the schoolyard bully have been punched in the face by a peon you regularly tortured.
After a few minor but highly-publicized Patent Office triumphs, RIM did what any un-self-respecting loser would do: it went to NTP and began negotiating a settlement, which now stands at $450m - that NTP won't accept. From a $54m judgment to pay NTP to a $450m settlement offer? Hard to believe, but tiny NTP must have had some serious negotiating leverage to get RIM to up its offer by more than $395m. And turn them down.
NTP, a technology-licensing company whose president and holder of 50 patents died last June, is now holding out for $1bin. And I hope they get it. It’s time for big, rich companies to start paying up to the smaller ones who claim they damaged them and can prove it in a court of law.
“The $1bn estimate,” of what RIM owes the company they damaged, “followed the refusal of the US Appeals Court to overturn a jury finding of infringement of the patents. RIM faces a court order halting the Blackberry service in the US if it cannot get the verdict thrown out.”
Here my editor steps in, editorially speaking of course, to enlighten me that this is really all about “submarine patents”. I respectfully disagree with him (as I almost always do) and firmly believe that NTP will win $1bn, be paid it, and perhaps even put RIM out of business for a short period, at least in the US - its biggest market - when RIM undoubtedly shoots itself in the foot yet again.
To be fair to RIM, it does hold 114 US patents. OK, so it is no IBM; but this is quite an achievement. However, 97 patents were awarded post-2000 and by a wide variety of technologists - unlike the 50 patents held by one man at NTP. This may be part of the problem with patents in general: when one man is working on a solution and hundreds in another country are also striving for the same type of proprietary advancements; how can there be any certainty around ownership and timing?
El Reg has featured info on this David vs. Goliath struggle before, but not keyed in on the right facet: A bigger company mustn't be allowed to crush a smaller company ala John D. Rockefeller and Standard Oil.
That’s what this is really all about.
Here's a snippet from a CNET interview this year with Donald Stout, co-founder of NTP, Inc.:
[Q] Do you think it's harder for smaller companies to defend their patents?
Stout: Yes, I think bigger companies' attitude is that if they use technology, they should be able to license it at a very small fee. At one point RIM offered a licensing fee of zero. In other words, they didn't want to pay anything for it.
Well, that's not acceptable. It's like telling someone, "I'll buy your house, but I won't pay you for it."
But at the risk of whipping a dead horse (a dead horse with no US service if the courts have their way), RIM management must be the most stubborn fools to set foot in a technology company, judging by how they turned this initially minor legal complication into a potentially lethal embarrassment.
Nokia has inked a licensing deal with NTP; why would RIM chance the patent-enforcement by NTP? [TechScape’s calls to Chairman and CEO Jim Balsillie’s office were not returned, forcing us to scratch our heads in bewilderment and predict disaster for RIM.]
In an update last week RIM issued a news release, really just to talk about other ways in which it previously “won” on the ridiculous notion of announcing that the US Supreme Court ruled against them. This all but confirms for me that it has given up the ghost in one final managerial death rattle.
I hope that more originators of more original ideas will take up the slack in the technology sector without these hideous scenarios where everyone is claiming ownership of ideas and technologies.
Perhaps we can find a way to prevent such future travesties in our technology world? One can live in hope. ®
Bill Robinson has appeared on CNN, PBS, Bloomberg and had his own segment on SKY News commenting on high-tech and marketing issues and has written columns and articles for FORTUNE Small Business, The Financial Times, Marketing Magazine (UK), Forbes.com, The Moscow Times, Cisco Systems iQ Magazine, United Airline's Hemispheres Magazine and Upside Magazine. Bill may be reached at email@example.com.