TELECOM Digest OnLine - Sorted: US Appeals Court Rejects Rehearing of RIM-NTP Case

US Appeals Court Rejects Rehearing of RIM-NTP Case

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Fri, 7 Oct 2005 20:49:48 -0500

By Jeffrey Hodgson and Peter Kaplan

A U.S. appeals court refused on Friday to reconsider a patent
infringement ruling against Research In Motion Ltd. in a case that
could halt U.S. sales of its popular BlackBerry wireless e-mail
device.

The Canadian firm had asked that all the judges on the U.S. Court of
Appeals for the Federal Circuit rehear and reconsider the ruling of a
three-judge panel first issued in December.

The case goes back to 2002, when patent holding company NTP
successfully sued RIM in a lower court. That first ruling found RIM
infringed on 16 claims tied to five NTP patents.

NTP won an injunction in 2003, stayed pending appeal, to halt
U.S. sales of the BlackBerry and shut down its service in the United
States.

A December appellate ruling concluded that RIM infringed on 11 NTP
patent claims, but scaled that back to seven in August.

RIM and NTP had reached an agreement in March to settle the dispute
for $450 million. That deal fell apart in June, but RIM has said it
would ask for court action to enforce the agreement.

NTP said in a statement that the latest appeals court ruling means the
case will go back to a lower court for "re-confirmation" of the
injunction. An NTP lawyer said the firm would move quickly to get the
case back before the lower court.

Waterloo, Ontario-based RIM said it now plans to seek a review of the
case by the U.S. Supreme Court.

RIM SHARES DROP

RIM's stock fell almost 4 percent, or $2.42, to $64.55 on Nasdaq on a
volume of more than 22 million shares. The stock at one point touched
$60, its lowest level since September 2004.

In Toronto, the stock dropped C$3.20 to C$75.95.

Canaccord Capital analyst Peter Misek said in a note to clients the
ruling was negative, but expected, and that a review by the
U.S. Supreme Court would be "another long shot."

"In the end, we think that NTP's negotiating position improves on the
news, which could warrant a settlement further in NTP's favor --
perhaps adding a few hundred million dollars on top of the original
$450 million," the note said.

"As a worst-case scenario, we could see RIM pay close to $1 billion."

Paradigm Capital analyst Barry Richards, who owns the stock, said he
thought investors were overreacting given that a rehearing was always
unlikely.

While RIM acknowledged Supreme Court reviews are uncommon, it said it
"continues to believe this case raises significant national and
international issues warranting further appellate review."

Meantime, RIM said it will ask the Federal Circuit to stay further
proceedings in the case until the U.S. Supreme Court makes a decision
on a review.

RIM said on Friday that if the ruling does go back to the lower court,
it expects the court will rule on its request to enforce the
agreement. It said it also expects the lower court would consider
recent patent office rulings.

The U.S. Patent and Trademark Office recently completed a
re-examination of eight NTP patents and issued initial rulings
rejecting 100 percent of the claims.

RIM has noted the ruling is not final, and NTP has said it plans see
the full re-examination process through, which could take years.

Some analysts have noted that until that process is complete, the
patents remain valid in the eyes of the court and could support an
injunction shutting down the BlackBerry service.

Copyright 2005 Reuters Limited.

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