Image: BlackBerry users
Richard Drew  /  AP
More than 3 million Americans are BlackBerry users.
updated 2/24/2006 5:57:40 PM ET 2006-02-24T22:57:40

BlackBerry owners will have to wait longer to learn the fate of their wireless e-mail devices: A federal judge ended a hearing Friday without making a ruling on an injunction request.

Shares of BlackBerry’s maker, Research In Motion Ltd. of Waterloo, Ontario, got a lift in afternoon trading following the court news as well as the second favorable decision this week from the U.S. patent office.

NTP Inc., a small patent-holding firm that successfully sued RIM for patent infringement, asked U.S. District Judge James R. Spencer to impose an injunction on the service with a 30-day grace period for the parties to work out the details.

The Arlington company also recommended that the judge immediately enjoin sales of new BlackBerry devices and award it an initial $126 million in damages. RIM has deposited at least $250 million in escrow, and NTP says that pot of money should be reserved just in case newer BlackBerry models infringe on its patents.

“This is a self-inflicted situation,” said NTP attorney James H. Wallace Jr., who compared RIM to a squatter who continued to live rent-free. “It’s just time to pay up.”

Henry C. Bunsow, a RIM attorney, said an injunction won’t be in the public’s best interests. And the process of excluding government and emergency employees from any ban would prove difficult and problematic, he said.

“It will take a lot of time,” Bunsow said. “It will take a lot of effort.”

Bunsow also pointed to a number of critical users who would not be exempted, including government contractors, energy companies and financial institutions.

Although analysts say an actual BlackBerry blackout is unlikely, the uncertainties in this case have rattled everyone from hospital administrators to the Justice Department. There are more than 3 million BlackBerry users in the United States, many of whom rely on the devices for daily communications.

Not surprisingly, Spencer’s courtroom was packed with attorneys, reporters and others interested in the case. More than 50 people had lined up outside the courthouse before doors opened.

Video: RIM response

After the hearing, RIM co-CEO James Balsillie provided assurances that BlackBerry owners would not see their screens go dark. The company has said it has developed software that would work around NTP’s patents, though analysts have raised concerns because few details have been released.

Balsillie also suggested a last-minute settlement was possible.

“I’m not rejecting anything,” he said outside the courthouse.

But Spencer might not wait. Though he provided no timetable, the judge indicated he would rule as soon as possible, noting that a jury already has heard the case and determined that RIM had violated NTP’s patents.

“The case should have been settled, but it hasn’t, so I have to deal with it,” Spencer said at the end of the hearing.

As for the government’s concerns, Spencer said they would be addressed in any injunction. The Justice Department, which sent its own attorneys to Spencer’s courtroom, asked for a 90-day grace period rather than NTP’s recommended 30 days.

Also Friday, the U.S. Patent and Trademark Office rejected a second NTP patent at the heart of the case, two days after ruling on the first. It has now formally rejected all but three key patents, and it has signaled it will invalidate them as well.

Despite the investor optimism, several patent attorneys not associated with the case said it still wasn’t clear Spencer would be swayed by RIM’s arguments, the patent office decisions or a decision by the U.S. Supreme Court to review a separate patent case involving eBay Inc. and a small Virginia business. That case could change the current practice of almost automatically granting injunctions in patent cases.

Susan Dadio, a patent attorney in Alexandria, suggested that RIM’s stock movement may be more related to the company’s public-relations push than the actual legal merits.

“At this point,” she said, “nobody has any idea as to Judge Spencer’s final ruling.”

NTP sued in 2001, and a year later, a federal jury agreed that RIM had infringed on the smaller firm’s patents. The jury awarded NTP 5.7 percent of U.S. BlackBerry sales — a rate that Spencer later boosted to 8.55 percent.

Spencer first issued an injunction in 2003 but held off on its enforcement during RIM’s appeals. After those efforts largely failed, the case returned to Spencer.

Should a BlackBerry shutdown actually occur, a wide variety of rivals might benefit, ranging from Microsoft Corp. and Palm Inc. to lesser-known software makers including Good Technology Inc., Visto Corp. and Seven Networks Inc.

A growing number of companies are making keyboard-equipped handhelds that can deliver BlackBerry-like service using Microsoft’s Windows Mobile operating system or third-party applications from the likes of Good and Visto. BlackBerry users also can switch to their cellular provider’s brand of service, many powered by Seven and Visto.

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