BLACKBERRY BATTLE
Steve Helber  /  AP
Anderson & Strudwick's research director Bradley Brown displays his Blackberry in his office in Richmond, Va., earlier this month. Blackberry customers say they've been left in the dark about a possible shutdown of the popular wireless e-mail service.
updated 12/16/2005 9:58:45 AM ET 2005-12-16T14:58:45

The stakes in a bitter legal feud over the BlackBerry wireless e-mail service just got a bit higher.

This week, a tiny patent holding firm battling the device's creator, Research In Motion Ltd. (RIM), announced a license agreement with RIM rival Visto Corp. With the deal in hand, Visto went straight to court and sued Microsoft Corp. for similar infringement claims. (MSNBC is a Microsoft-NBC joint venture.)

The announcements could put more pressure on RIM to settle with its little challenger, NTP Inc., perhaps for up to $1 billion. Both sides, however, show no signs of letting up, even with the looming threat of a court-ordered shutdown of U.S. BlackBerry service.

"It sounds like a little bit of Russian roulette," said Carl Tobias, a law professor at University of Richmond.

Indeed, things have heated up since last month's news that a federal judge in Richmond could soon consider an injunction, perhaps within the next several weeks. Analysts believe the odds of a BlackBerry e-mail blackout are very low because RIM will settle or try to make changes to work around NTP's patents. Even if the judge orders a shutdown, he's likely to give users 30 days or more to switch to other devices.

Still, the unanswered questions in this suit aren't helping Waterloo, Ontario-based RIM.

The company's stock has plunged 21 percent this year. Customers are getting nervous. And with RIM looking vulnerable, competitors like Nokia Corp. and Palm Inc. are looking to grab sales from the market leader. RIM has 3.65 million BlackBerry subscribers, most of them in the United States.

"I think (RIM executives) may find in the end that the self-inflicted wounds are the most painful," said Matthew D. Powers, a Silicon Valley patent attorney.

RIM may be backed in a corner. A federal jury in Richmond sided with NTP in 2002. Since then, RIM's appeals have failed and a $450 million settlement has unraveled. RIM has pinned its hopes on separate proceedings by the U.S. patent office, which has preliminarily rejected the patents at issue. But there have been no final decisions, and time is running out.

Negotiations between RIM and NTP were on and then possibly off last week. More recently, both companies were trying to keep their lips zipped about the status of their talks.

To avoid similar litigation, RIM competitors like Nokia and Good Technology Inc. have inked license agreements with Arlington, Va.-based NTP. In addition to signing its deal with Visto, NTP bought a stake in the Redwood Shores, Calif., company, which licenses its mobile e-mail technology to Sprint Nextel Corp. and Vodafone Group PLC, among others.

Wednesday night, Visto filed suit against Microsoft in U.S. District Court in Marshall, Texas. The privately held company claims that Microsoft's "foray into mobile e-mail and data access" infringes on three of its patents.

James H. Wallace Jr., an attorney for NTP, says he plans to argue in federal court in Virginia that these deals show there are available options for customers in the event of an injunction against RIM.

Although some industry observers believe NTP has no financial incentives to force a shutdown, lawyers for the company have claimed otherwise.

"I understand that theory, and when BlackBerry was the only game in town, there was a certain logic to it," Wallace said.

Mark Guibert, vice president of corporate marketing for RIM, said in an e-mailed statement that he thinks most people will see through Visto's "timing and rhetoric."

"This is a small player looking for free publicity through a last-minute license with undisclosed terms for patents that have been rejected by the patent office," Guibert wrote.

While the two sides continue fighting, many U.S. customers say they have been left in the dark. Users have become increasingly frustrated with RIM and their wireless service providers for shedding little light on the suit's potential impact.

"There's been a complete lack of contact," Bradley Brown, research director for the investment firm Anderson & Strudwick in Richmond, said of his service provider, Sprint Nextel. "They have my e-mail, and obviously have my phone number."

Many users haven't given up on their BlackBerries, but they're clearly getting agitated.

Virginia's government is looking into other services, particularly for "critical users," said Kevin Hall, a spokesman for Gov. Mark R. Warner. And officials with Northwest Airlines Corp. were worried enough to demand a recent meeting with RIM.

Although the airline said it was satisfied with RIM's information, it also noted that it had identified alternative suppliers and was continuing to monitor the BlackBerry situation to ensure service would not be interrupted.

In a statement, RIM said it was speaking directly to customers and partners to explain the patent office's decisions and to "assure them that we have prepared a contingency plan to implement a software workaround should it eventually become necessary."

Wireless service providers provided similarly hazy statements.

Dobson Communications Corp., which provides Cellular One service, says it was working with RIM to ensure customers do not experience service lapses.

Sprint Nextel said it has seen RIM's workaround solution but would not say whether it was satisfied with the plan. (RIM has provided few details about the changes, and analysts have raised questions about whether it would be effective and immune to further NTP challenges.)

To help allay fears, Sprint Nextel said it has put concerned customers on the phone with RIM. "It's my understanding in some cases that it has been effective," said Matt Sullivan, a spokesman for Sprint Nextel.

Copyright 2005 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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