BlackBerry settles suit over patent for $612.5 million
Peter Svensson Associated Press Mar. 4, 2006 12:00 AM
NEW YORK - The maker of the BlackBerry e-mail device said Friday that it has settled its patent dispute with a small Virginia-based firm, averting a possible court-ordered shutdown of the BlackBerry system and a disruption of wireless service for millions.
Research in Motion Ltd. has paid NTP Inc. $612.5 million in a "full and final settlement of all claims," the companies said.
James Balsillie, RIM's co-chief executive, said the company was "taking one for the team," sparing clients and partners the uncertainty of litigation. "We're happy to do that to support the team, but do we feel good about it? No," he said. advertisement
At a hearing last week, NTP had asked a federal court in Richmond, Va., for an injunction blocking the continued use of key technologies underpinning the BlackBerry service.
At the hearing Friday, Judge James Spencer expressed impatience with RIM and urged a settlement.
"He basically questioned the sanity of RIM, and said it wasn't acting very rationally," said Rod Thompson, patent attorney in San Francisco. "His prodding of the parties worked."
The settlement is on the low end of expectations, Thompson said, especially since RIM will not have to pay any future royalties. There had also been talk of NTP getting a stake in RIM.
Shares of RIM rose $13.78, or 19 percent, to $85.70 in after-hours trading, when the settlement was announced. RIM closed 53 cents higher at $71.92 in regular trading Friday on the Nasdaq Stock Market.
"NTP is pleased that the issue has been resolved and looks forward to enhancing its businesses," said Donald Stout, NTPs co-founder, in a written statement.
Thomas Campana Jr., the other founder of Arlington, Va.-based NTP, in 1990 created a system to send e-mails between computers and wireless devices. Campana died in 2004. He is survived by his wife, who owns a large stake in NTP.
RIM, based in Waterloo, Ontario, had already put away $450 million in escrow, the amount of a 2005 settlement that later fell apart. RIM will record the additional $162.5 million in its fourth-quarter results, it said.
The settlement ends anxiety for many of the more than 3 million BlackBerry users in the United States. Uncertainty had some customers wondering whether they would experience brief outages, even a shutdown.
"I'm relieved," said Matt Lattman, a management consultant in Boston. "I've had it for about a year, and at this point, I can't imagine life without it."
A settlement was likely, especially because the judge warned last week that an injunction was still possible, said George Chen, a registered patent attorney with the Phoenix law firm of Bryan Cave.
"RIM couldn't afford to just shut down. This was the best business move for them," he said. "They had too many users."
Republic staff contributed to this article.