February 24, 2006

Judge hears arguments on BlackBerry’s fate

By Peter Kaplan and John Crawley

RICHMOND, Virginia (Reuters) - A U.S. judge began hearing arguments on Friday over whether to pull the plug on BlackBerry e-mail devices as part of a fight over patents for the pocket-sized technology used by millions of Americans.

Research In Motion Ltd., a Canadian company that makes the BlackBerry, has been locked in a court battle for more than four years with privately held NTP Inc., which successfully sued RIM for infringing on its patents.

U.S. District Judge James Spencer opened the hearing without giving any indication of whether he is inclined to impose the injunction against U.S. BlackBerry service that he stayed in 2003 pending RIM's appeals.

NTP asked Spencer for an injunction against U.S. BlackBerry service with a 30-day grace period for users and the immediate imposition of $126 million in damages for past infringement.

"There's no reason for delay; it (the damages) should be done as soon as possible," said John Wyss, a lawyer for NTP.

RIM was due to make its arguments next. Spencer said he would allow the U.S. government, which has asked that its employees be exempt from any shutdown, to make its oral arguments last.

The two companies reached a tentative settlement of $450 million early last year, but the deal fell apart. Some analysts have estimated that a settlement at this point could cost RIM as much as $1 billion.

RIM has denied any patent infringement and contends that a court order halting U.S. service would be premature. It has said in court documents there is an "exceptional public interest" in maintaining uninterrupted BlackBerry service, especially for national security, health and safety workers.

The small portable e-mail devices are used by over 3 million U.S. subscribers including government officials and lawmakers.

Some users have complained about thumb injuries from their almost addictive tapping of the tiny keyboards on their so-called "CrackBerries" to send a steady stream of messages during meetings and while traveling.

RIM says it has developed and tested a technical work-around to allow BlackBerry service to continue even if an injunction is issued.

"The world, we suggest, will not come to an end" if an injunction is issued, NTP attorney James Wallace told Spencer on Friday.

Among the alternatives to the BlackBerry is the Treo 650 smartphone made by computer and smartphone maker Palm Inc..

Others who could cash in on a BlackBerry blackout are Nokia, Samsung Electronics and Hewlett-Packard Co., which offer e-mail capable mobile phones.

RIM has challenged the validity of the NTP patents in an administrative proceeding at the U.S. Patent and Trademark Office but the process is lengthy and NTP could appeal any final decision against it back to the courts.

On Wednesday the patent office issued decisions rejecting two of the five patents at issue in the case.

Shares of RIM were up 2.5 percent to $71.25 in morning trading on Nasdaq.