A federal appeals court has denied Research In Motion's request to delay the next phase in a long-running patent suit while the maker of...
NEW YORK — A federal appeals court has denied Research In Motion’s request to delay the next phase in a long-running patent suit while the maker of BlackBerry e-mail devices appeals an infringement verdict to the Supreme Court.
The U.S. Court of Appeals for the Federal Circuit’s refusal to issue a stay means the case will proceed back to a district court, which will reconsider certain aspects of a 2003 jury verdict won by NTP. The lower court also will reconsider a dispute over whether the companies reached a settlement earlier this year.
Shares of Research in Motion (RIM) fell $2.32, or 3.6 percent, to close at $62.34 yesterday.
“This is pretty bad” for RIM, said Pablo Perez-Fernandez, a ThinkEquity Partners analyst in San Francisco who rates the shares “sell” and doesn’t own them. “It reduces the options that RIM has and brings the injunction that much closer. This is a very serious problem for RIM.”
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RIM, based in Waterloo, Ontario, said yesterday it will ask the Supreme Court to suspend the court proceedings while deciding whether to hear the appeal.
The refusal to stay the case comes two months after a three-judge panel from the appeals court upheld most of the 2003 verdict, which has raised the seemingly remote possibility that RIM might be forced to stop selling BlackBerrys without a settlement.
But the August decision also identified certain errors during the trial, thereby reversing some of the infringement finding and asking the trial court to review whether those errors tainted the overall jury verdict.
NTP, based in Arlington, Va., has disputed the significance of that ruling as well as a series of “preliminary” rejections by the U.S. Patent and Trademark Office of the five patents RIM was found to have violated.
Unless RIM can reach a new settlement with NTP or get the case overturned by the Supreme Court, it’s virtually certain to be ordered to halt BlackBerry service in the U.S., legal experts said.
“There have only been a handful of cases in the United States where a successful patent owner didn’t receive an injunction,” patent lawyer Brad Hulbert of McDonnell Boehnen Hulbert and Berghoff in Chicago said in an interview before yesterday’s decision. “A lot of business executives don’t understand that. They assume that injunctions are rare.”
Settlement talks broke down in June, months after the companies appeared to reach an agreement that called for a $450 million payment to NTP.
RIM has indicated it will ask the trial court to enforce the settlement, while NTP has maintained that the companies failed to reach an agreement over licensing terms for the patents in dispute.
“We’re willing to settle the case, but not on terms that RIM is going to dictate,” said Donald Stout, an attorney for NTP. “If the judge says ‘NTP you’re right, there’s no contract,’ we will offer RIM a license with terms and conditions that we’re willing to grant them a license under. And if they don’t take that, we’ll seek to enforce the injunction for RIM to stop selling BlackBerry mobile devices and service.”
RIM, in a statement, said it “maintains that an injunction is inappropriate given the facts of the case and substantial doubts raised subsequent to trial as to the validity of the patents in question.”
Comments by Perez-Fernandez and Hulbert and information about Blackberry backup technology provided by Bloomberg News.