Last shot for Research In Motion?

By David M. Ewalt and Dan Frommer

updated 6:06 a.m. ET Feb. 24, 2006

Hear that noise? It's the sound of 4.3 million e-mail addicts shaking in their boots.

Later today, a federal judge will hear arguments in the long and ugly patent battle between Research In Motion (nasdaq: RIMM - news - people) and NTP — and could order RIM to shut down its hugely popular wireless e-mail service. The decision could leave millions of "CrackBerry" addicts disconnected from their favorite gadgets, cost RIM upwards of a billion dollars and cause chaos for users who depend on the devices.

"It will be a tremendous inconvenience for the portion of our workforce that has come to depend on it," says Jean-Marc Halbout, CIO of Quest Diagnostics, and a fan of the BlackBerry service.

The legal dispute began in the early 1990s, when inventor Thomas Campana came up with a method for delivering wireless e-mail, and co-founded NTP to protect his patents. NTP never released a product, but not long after, RIM did — and their "BlackBerry" caught on quickly.

In 2000, NTP filed a patent-infringement suit against RIM, and in 2003, Judge James Spencer of the U.S. District Court for the Eastern District of Virginia ruled in NTP's favor, awarding $210 million in damages. He also granted an injunction banning BlackBerry sales and service in the U.S., but put it on hold pending appeal. Ever since, the case has lurched through various courts and appeals; for a while, it even looked like RIM and NTP had reached a $450 million settlement, but the deal fell apart.

Eventually, the case returned to Spencer's court, where he quickly made it clear that he wanted the whole mess over and done with, saying he'd "spent enough of my life and time on NTP and RIM." In the months since, he has refused to be swayed by the U.S. Patent and Trade Office striking down the patents or to heed the entreaties of high-profile users, including the U.S. Department of Justice, which said that a ban could disrupt essential government services.

In Friday's hearing, Spencer will hear arguments over whether or not to enforce the long-delayed injunction. It's expected that he'll issue his decision soon after.

Most observers agree that Spencer is likely to enforce his earlier injunction. But opinions vary on what that will actually mean, and whether it will really cut RIM off from the market that provides 70 percent of its sales.

Avi Greengart, principal mobile-device analyst for Current Analysis, says an injunction is likely. But he says he expects Spencer to grant a delay long enough for RIM to keep service running while not infringing on NTP's patents. Earlier this month, Jim Balsille, co-CEO of RIM, said the company had developed and tested software fixes that should allow the service to stay online if Spencer moves forward with the injunction; he says the new technology wouldn't infringe on NTP's patents.

If the workarounds actually work, that means RIM is under less pressure to sign a costly settlement with NTP and can continue to fight the case in court or haggle for a cheaper deal.

But that's not to say the workaround is a cure all. Implementing it would be messy and could cause problems. "It's going to put an undue administrative burden on customers to make upgrades to their software," says Gene Signorini, research director at the Yankee Group. "It certainly isn't what customers want to see."

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