Originally created 08/07/03

Judge suspends sale of BlackBerry units

RICHMOND, Va. -- A federal judge has ordered Research in Motion Ltd. to stop selling its BlackBerry wireless e-mail units because of patent violations, but he stayed the decision while the company pursues an appeal.

The ruling late Tuesday by U.S. District Court Judge James R. Spencer came after a jury's finding last year that the BlackBerry infringes on patents held by NTP Inc. of Arlington, Va. Spencer ordered RIM to pay $53.7 million in damages, though he let RIM keep selling BlackBerrys while the appeal is heard.

The appeals court's review and a re-examination of the patents in question could take years to complete, but RIM attorney Henry Bunsow said "we remain confident that RIM will ultimately prevail in this matter."

"RIM has always disputed the validity and infringement of the NTP Inc. patents, and we continue to believe the jury verdict was wrong as both a matter of law and fact," Bunsow said.

Investors apparently were less confident. The U.S. stock of the Canadian company fell 11 percent to $25.12 a share Tuesday after Spencer's ruling was issued and continued to drop Wednesday, hitting $24.22 in afternoon trading on the Nasdaq Stock Market.

NTP attorney James H. Wallace Jr. said Spencer's ruling "was exactly what was expected" based on previous filings in the case. He said he expects the appeals process to take between one and two years.

The judge ordered RIM to stop selling nine models of the BlackBerry units as well as several versions of its "redirector" software, and to stop offering wireless e-mail service. He also barred the company from advertising or marketing any of those products or services. The prohibition would continue until NTP's patents expire in 2012.

In addition to compensatory damages of $33.4 million, RIM would be liable for $14 million in "enhanced" damages as well as millions of dollars more in attorneys' fees and interest.

The total of $53.7 million is more than double the $23.2 million originally awarded by the jury in November.

RIM previously set aside $27.8 million this year to cover its potential liability and court costs in the case.

In its most recent fiscal year, which ended March 1, the Waterloo, Ontario-based company reported revenue of $306.7 million and a net loss of $148.7 million.


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