RIM pressured to settle BlackBerry case

updated 9:58 a.m. ET Dec. 16, 2005

RICHMOND, Va. - The stakes in a bitter legal feud over the BlackBerry wireless e-mail service just got a bit higher.

This week, a tiny patent holding firm battling the device's creator, Research In Motion Ltd. (RIM), announced a license agreement with RIM rival Visto Corp. With the deal in hand, Visto went straight to court and sued Microsoft Corp. for similar infringement claims. (MSNBC is a Microsoft-NBC joint venture.)

The announcements could put more pressure on RIM to settle with its little challenger, NTP Inc., perhaps for up to $1 billion. Both sides, however, show no signs of letting up, even with the looming threat of a court-ordered shutdown of U.S. BlackBerry service.

"It sounds like a little bit of Russian roulette," said Carl Tobias, a law professor at University of Richmond.

Indeed, things have heated up since last month's news that a federal judge in Richmond could soon consider an injunction, perhaps within the next several weeks. Analysts believe the odds of a BlackBerry e-mail blackout are very low because RIM will settle or try to make changes to work around NTP's patents. Even if the judge orders a shutdown, he's likely to give users 30 days or more to switch to other devices.

Still, the unanswered questions in this suit aren't helping Waterloo, Ontario-based RIM.

The company's stock has plunged 21 percent this year. Customers are getting nervous. And with RIM looking vulnerable, competitors like Nokia Corp. and Palm Inc. are looking to grab sales from the market leader. RIM has 3.65 million BlackBerry subscribers, most of them in the United States.

"I think (RIM executives) may find in the end that the self-inflicted wounds are the most painful," said Matthew D. Powers, a Silicon Valley patent attorney.

RIM may be backed in a corner. A federal jury in Richmond sided with NTP in 2002. Since then, RIM's appeals have failed and a $450 million settlement has unraveled. RIM has pinned its hopes on separate proceedings by the U.S. patent office, which has preliminarily rejected the patents at issue. But there have been no final decisions, and time is running out.

Negotiations between RIM and NTP were on and then possibly off last week. More recently, both companies were trying to keep their lips zipped about the status of their talks.

To avoid similar litigation, RIM competitors like Nokia and Good Technology Inc. have inked license agreements with Arlington, Va.-based NTP. In addition to signing its deal with Visto, NTP bought a stake in the Redwood Shores, Calif., company, which licenses its mobile e-mail technology to Sprint Nextel Corp. and Vodafone Group PLC, among others.

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