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| If RIM was to lose the patent infringement case, the company could be ordered to halt BlackBerry sales in the US, which accounts for almost 70 percent of sales |
US company NTP Inc. offered to settle its legal battle with the Canadian BlackBerry-maker Research In Motion Ltd. (RIM) in return for a payment equal to 5.7% of BlackBerry's expected revenue in the U.S. until 2012.
The Wall Street Journal in its Saturday edition says that such a royalty would cost RIM more than $900 million, according to an estimate by Merrill Lynch.
The newspaper says that RIM officials weren't available to comment, but NTP co-founder and shareholder Donald Stout said NTP presented the settlement proposal to RIM, and RIM responded with a proposal that was "not acceptable to us." He declined to discuss RIM's proposal, but said the two sides are "not close to a deal."
RIM and NTP are involved in a legal dispute over wireless-email patents held by NTP, a Virginia patent-holding firm. NTP will seek a ban on US BlackBerry sales and email service at upcoming hearings in US District Court in Virginia. The court has ruled that RIM infringed on NTP patents. RIM is claiming that a BlackBerry ban isn't appropriate for various reasons, including recent preliminary moves by the U.S. Patent and Trademark Office to reject NTP's patents.
NTP's patents expire in 2012. NTP's 5.7% offer was reported in Canada's Globe and Mail newspaper Friday.
While closely held NTP has provided RIM a percentage of U.S. BlackBerry revenue that it would accept as a settlement, any dollar amount corresponding to that percentage would depend on estimates of RIM's future sales and would have to be negotiated, Stout told the Journal. He declined to estimate the amount. "This is not something where you just fill in the blank easily," however Stout said the amount would be larger than the $450 million RIM had agreed to pay NTP in March under a preliminary agreement, which later broke down. RIM has already set aside approximately $240 million payable to NTP should NTP win the case, Stout said.
Patent Office ruling
The patent office issued what it called a ``non-final action'' on Thursday December 1st, saying that one of the five patents owned by NTP is invalid. Still pending is a reconsideration of another patent that was found to be infringed by Research In Motion.
A final decision on the patents could be years away, said NTP lawyer James Wallace. U.S. District Judge James R. Spencer took note of that in a ruling on November 30th, yesterday, allowing the underlying patent suit against Research In Motion to proceed. The company is facing a possible halt to its BlackBerry service in the U.S.
The Patent Office signalled Thursday that the rejection would have been a so-called "final office action" but for a "new rejection based on a strongly anticipatory printed publication (Norwegian Telecommunications report) (also known as Telenor) that was recently disclosed by the patent owner."
The Wall Street Journal says that it appears that NTP told the Patent Office about a company called Telenor whose technology predates NTP's claims, rendering them invalid, according to Lance Johnson, patent lawyer at Roylance, Abrams, Berdo Goodman LLP in Washington.
NTP was obliged to inform the Patent Office of Telenor's existence and technology once it came upon that knowledge, said Mr. Johnson, who isn't involved in the NTP dispute with Research in Motion.
The newpaper says that the patent fight involves RIM's use of technology to send email wirelessly and automatically, and without a need to manually retrieve messages. A jury found RIM infringed NTP's patents, rejecting the company's defense that since BlackBerry emails are sent through a Canadian network U.S. patents don't apply.
