Originally created 12/01/05

Judge halts BlackBerry case settlement



RICHMOND, Va. - A federal judge ruled invalid Wednesday a $450 million settlement between a small patent holding firm and the maker of BlackBerry e-mail devices, Research in Motion Ltd.

The ruling by U.S. District Judge James R. Spencer is a victory for NTP Inc., an Arlington company that contends the technology behind the popular BlackBerry infringes on its patents.

Canada's Research in Motion had sought to uphold the settlement, which was reached earlier this year. NTP argued that it was never finalized.

As expected, Judge Spencer also denied Research in Motion's request to delay the case while awaiting word from the U.S. Patent and Trademark Office, which is re-examining NTP's patents. The patent office has preliminarily rejected the patents at the core of the lawsuit.

Judge Spencer's decisions raise more uncertainties for BlackBerry users in the United States, where most of the company's 3.65 million customers are based. The judge could next consider re-issuing an injunction that threatens to shut down BlackBerry service in this country.

However, analysts and industry observers expect Research in Motion could be backed into a corner and forced to settle for a sum as high as $1 billion.

"It was pretty much as predicted, and it indicates that Judge Spencer is going to move swiftly to conclude the case," said James H. Wallace Jr., an attorney for NTP. "We would hope that these developments would bring the parties back to the table to resolve this matter."

When asked whether U.S. BlackBerry users might see an end to their service, Mr. Wallace said Research in Motion officials "own the keys to their own jail."

A Research in Motion lawyer didn't immediately return a telephone call.

The Nasdaq market halted trading of BlackBerry's shares just before the ruling was made public.

Judge Spencer said he would be communicating with both parties to set up a hearing date and briefing schedule "on the remaining issues of injunctive relief and appropriate damages."

NTP was co-founded by Thomas J. Campana Jr., a Chicago-area engineer who in 1990 created a system to send e-mails between computers and wireless devices. He helped form NTP to protect his work.

In 2002, a federal jury in Richmond agreed that Research in Motion had infringed on NTP's patents and awarded the smaller company 5.7 percent of U.S. BlackBerry sales. Judge Spencer increased that rate to 8.55 percent.

The amount of damages and fees had reached $210 million at last count.