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BlackBerry shutdown fears are overblown

There's no guarantee that cooler minds will prevail in the BlackBerry patent battle, but fears of an impending shutdown in the mobile e-mail service are overblown even though the Supreme Court has declined to intervene.
/ Source: The Associated Press

There's no guarantee that cooler minds will prevail in the BlackBerry patent battle, but fears of an impending shutdown in the mobile e-mail service are overblown even though the Supreme Court has declined to intervene.

BlackBerry users have been unnerved by warnings from industry analysts and media coverage highlighting the shutdown threat. All these jitters have bolstered the negotiating hand of NTP Inc., the small company that in theory could force Research in Motion Ltd., the Canadian maker of BlackBerry handhelds, to turn off its service in the United States.

The point here is not about justice or whether the technology behind BlackBerry illegally infringes on patents held by Virginia-based NTP. Simple logic says a BlackBerry shutdown would be a disaster for both companies.

Nevertheless, one respected consulting firm issued a stark warning in early December: "Stop or delay all mission-critical BlackBerry deployments and investments in the platform until RIM's legal position is clarified," Gartner Inc. wrote to its clients. That grim assessment stoked worries among Wall Street analysts, who noted in their investment advice the warning and its likely effect on RIM's business.

Earlier this month, Gartner inched backed from that warning, assigning only a 10 percent probability to the risk of BlackBerry shutdown. That's still a stretch, even now that there won't be a Supreme Court appeal to delay a key lower court ruling due in late February.

The art of negotiation always revolves around a concept that textbooks call "BATNA," an acronym for "Best Alternative To a Negotiated Agreement." The basic idea is that each party in a negotiation needs to identify what, if any, options are available if there is a stalemate. If there's no alternative, you'd better reach a deal and not walk away from the table empty-handed.

So far, a federal jury has sided with NTP's charge of infringement, while some preliminary rulings by the U.S. Patent and Trademark Office have raised some doubt about the validity of NTP's patents.

RIM says it can win in the courts and at the patent office. NTP insists it can and will ask the judge in the case to enforce an injunction to shut down BlackBerry that he issued after the jury verdict but put on hold during the appeals process. That's as it should be. NTP's job in this negotiation is to make its threat sound credible enough to spook as many BlackBerry users as possible.

Mutually assured destruction
In reality, the posturing conjures up the Cold War concept of mutually assured destruction: once the nuclear missiles start flying, no one wins. That deterrent was never a foolproof safeguard against nuclear doomsday, but it served as a strong cause for hesitation before pressing any buttons.

For NTP, which has been offered $450 million by RIM and sought closer to $1 billion, there's no alternative but a settlement that can produce a payday nearly as plump as those numbers.

The flaw in NTP's bargaining position is that it doesn't have a real product of its own. If this battle were between Yahoo Inc. and America Online or maybe even RIM and a rival device maker such as Palm Inc., forcing the shutdown of an opponent's product could bring a windfall of customers seeking a replacement.

NTP has entered into licensing deals with BlackBerry rivals Good Technology Inc. and Visto Corp., which combined have perhaps a tenth of RIM's customer base of 4.3 million users.

Good and Visto both say BlackBerry jitters have fueled demand for their services — and more royalties for NTP. But they are hardly the only mobile e-mail games in town. There's a company named Microsoft Corp. making a big push into mobile e-mail, as well as numerous smaller players.

RIM, on the other hand, is motivated to settle because shutdown jitters, irrational as they may be, aren't very good for business. Twice since November, it has lowered its forecast for new users during the current quarter.

The Canadian company has tried — with few specifics and to little avail — to reassure customers that it has developed a "work-around" technology to keep the service running if a shutdown is ordered. Even if the recent patent office rulings have emboldened RIM's belief it can prevail in court, a hard-line stance will prolong the publicity headache with users and investors.

That's why the doomsday scenario, while not impossible, is hardly likely. To assert otherwise is to become a pawn in the negotiations.