The maker of the BlackBerry handheld computer, Research in Motion (RIM), moved closer to a potentially devastating court injunction in the United States market on Wednesday after a judge denied its request to end a patent-violation lawsuit.
US District Judge James Spencer ruled that a $450-million settlement of the lawsuit by US-based NTP Software was not ”enforceable”, and rejected a request by the Canadian-based firm to delay further proceedings.
The ruling opens the door for a possible injunction against RIM to stop selling and servicing its BlackBerry device in the US, where more than two million people use it for wireless e-mail and other functions.
Spencer, based in Richmond, Virginia, held off any immediate action against RIM, saying lawyers for both companies must set up a briefing schedule and a date to hear opposing arguments on the injunction and damages.
RIM had asked for a suspension of the proceedings and for the judge to accept an earlier settlement of the case for $450-million that fell through.
”The court finds the parties do not have a valid and enforceable settlement agreement,” the judge wrote.
The Canadian firm gets about 70% of its revenues from BlackBerry sales and subscriptions in the US, so an injunction could be devastating.
Last month, the US Court of Appeals in Washington also refused to delay proceedings to enforce the injunction sought by NTP, which claims the popular Blackberry device breaches its patents.
RIM shares tumbled nearly 6% after the ruling on investor fears of a disruption in service.
Mike Abramsky, analyst at RBC Capital Markets in Toronto, said RIM is running out of options.
”The threat of RIM facing an injunction is real, and with few cards left to play, RIM must move to settle,” he said in a research note, adding that the company may have to pay up to $1-billion.
Abramsky said the judge may give RIM another 10 days to prepare for a hearing and possibly 90 days for notice of a possible shutdown.
”Spencer has exhibited frustration with the protracted resolution of this case [to both parties], and thus will likely rule on the injunction swiftly,” the analyst said.
RIM said it is working on a so-called ”software workaround” that could keep the BlackBerry in service in the event of an injunction.
The company has been ”preparing software workaround designs, which it intends to implement if necessary to maintain the operation of BlackBerry services in the US”, according to a statement.
RIM said it plans to appeal the case to the US Supreme Court, which declined to hear an emergency petition but still could review the original ruling.
”While further review by the Supreme Court is generally uncommon, RIM continues to believe this case raises significant national and international issues warranting further appellate review,” the Canadian firm said.
The case stems from a lawsuit filed in 2001 by NTP alleging RIM infringed on its patents for wireless e-mail technology. Spencer initially ruled that RIM violated several patents and issued an injunction against the company, but postponed enforcement pending appeal.
An appeals court threw out some parts of the original ruling, but still held RIM liable for infringement in some areas, sending the case back to Spencer.
In Wednesday’s seven-page ruling, the judge said there were no further grounds to delay the enforcement.
”The court recognises the rights of a patent holder whose patents have been infringed,” he wrote. ”Indeed, the essence of patent protection is that a party legally deemed to have infringed one or more patents shall be liable to the patent holder for damages.
”Valid patents would be rendered meaningless if an infringing party were allowed to circumvent the patents’ enforcement by incessantly delaying and prolonging court proceedings which have already resulted in a finding of infringement.” — Sapa-AFP