RIM and NTP Reach A Settlement

Blackberry Services Saved

After settling a grueling lawsuit with patent company NTP, Blackberry maker Research in Motion looks forward to regaining the high consumer sales momentum reached prior to the case.

In March RIM agreed to pay NTP 612.5 million dollars. In return, NTP issued RIM a license that will continue the allowance of Blackberry services.

Five years ago, NTP filed a lawsuit against RIM claiming that the Blackberry device infringed on its patents. In 2002, a jury ruled that RIM had indeed infringed on its patents and awarded NTP with a massive 5.7 percent of all U.S. Blackberry sales. That alone took a heavy toll on the sales production of RIM.

The case began to look better for RIM in 2005 when a 450 million dollar lawsuit had been reached, but RIM was once again disappointed when the judge rejected the settlement.

Blackberry consumers, especially businesses and their employees feared the possible shutdown that could result from the case. Over 4 million Blackberry users could have possibly been affected if a service interruption occurred. Many corporations who use and rely on Blackberry for its services are concerned. “Many Blackberry users here at LECG are anxiously watching the news regarding the RIM patent infringement lawsuit brought by NAP,” said R. Forrest McCluer, an employee of the Law and Economics Consulting Group (LEG).

Speculation amongst consumers continued when RIM released its plans of a software “workaround” if the injunction occurred. The workaround would have been inconvenient for Blackberry costumers because it would have required the reloading of software on the devices. The solution would have also been a bad strategic move for RIM during its lawsuit with NTP.

“While there may have been some chance that RIM could have found either a legal or technical work-around, their strategy has turned out to be a high stakes gamble where the odds of winning are getting slimmer with each ruling from the courts,” said McCluer.

Not everyone was shaken by the lawsuit; some customers were very optimistic about the outcome of the case. “I’m sure some resolution will be reached on the royalties that will be paid to the patent holder since they would not get very much [royalties] if Blackberry’s all stopped running,” said Dr. William E. Spriggs, the chair of Howard University’s Economics Department.

Unfortunately, the case itself took a toll on RIM stock leaving stockholders uncertain of the future of RIM shares. RIM also faced a shortfall of subscribers in the fiscal fourth quarter by nearly 80,000 due to the case and uncertainty amongst consumers.

After the settlement on March 3 Rim shares began to rise 15 percent per day, according to the Chicago Tribune. RIM is looking forward to continue their leadership in the technology business and expect a 580-610 million-dollar range in revenue for the fiscal 2007.