US Judge Increases Patent Infringement Penalties On RIM

by Glen Shapiro, LawandTax-News.com, New York

28 May 2003

Research In Motion (RIM), originator of the BlackBerry wireless e-mail technology, has been forced to provide US$58m in total against the possible costs of the patent infringement action against it by US company NTP after a US court last week awarded increased penalties to NTP.

Although the whole action, which began in 2001, is still subject to appeal, the judge at last week's hearing at the US Federal District Court in Richmond, Virginia, said RIM should pay NTP 80% of its legal fees. The court also increased the royalty RIM must pay NTP on each BlackBerry device sold to 8.5%.

In November 2002, a jury in the US said RIM should pay $23.1 million to NTP in the patent case after agreeing that RIM had infringed eight of NTP's patents. After the new setback for RIM, its shares fell C$3.66 in Toronto to close at C$23.74. The stock did not trade on Nasdaq on Monday because of the US Memorial Day holiday.

Commentators said that the judge, who was highly critical of RIM's supposed investigation of the alleged patent infringement, could have awarded triple compensatory damages to NTP, and expect RIM to reach a settlement with NTP in due course. The judge has not yet ruled on NTP's request for an injunction to halt US BlackBerry sales, a decision expected in the next few weeks. RIM is expected to appeal to have an injunction immediately stayed.

RIM has cash reserves of more than $500m, and was expected to reach break-even this year or next, something which now seems unlikely.

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