Court Ruling on RIM May Mean Blackberry Shutdown

TORONTO – A U.S. appeals court on Friday denied a motion to stay a patent case against Research In Motion Ltd. (RIMM), bringing RIM closer to an injunction that could shut down its popular BlackBerry (search) email service in the United States.

The U.S. Court of Appeals for the Federal Circuit (search) denied RIM's motion to suspend the case pending RIM's request for a U.S. Supreme Court review.

The case goes back to 2002, when patent holding company NTP (search) successfully sued RIM in a lower court. It won an injunction in 2003 to halt U.S. sales of the BlackBerry and shut down its service, although that ruling was stayed pending appeal.

The case will now move back to the U.S. District Court for the Eastern District of Virginia where it was first heard.

NTP said on Friday it will ask that the injunction be confirmed. The closely held firm said the injunction would not affect BlackBerry products used by U.S. federal, state, or local governments, where the wireless email device has become increasingly popular.

RIM said it believed an injunction was inappropriate but added: "It ultimately will be up to the courts to decide these matters and there can never be an assurance of a favorable outcome in any litigation."

The Waterloo, Ontario-based firm will also ask the U.S. Supreme Court to suspend proceedings pending a possible review, although it acknowledged this was "generally uncommon."

RIM and NTP reached a $450 million settlement on the dispute in March, but the deal fell apart in June. RIM wants the lower court to enforce the agreement.

RIM shares, halted pending the news, pared earlier losses and were 1.8 percent lower at $63.54 on Nasdaq on volume of more than 9 million. In Toronto, they fell 45 Canadian cents to C$75.30.

American Technology Research analyst Rob Sanderson said the latest ruling should not come as a surprise.

"What RIM was asking was to not move this case forward until the Supreme Court can decide. That request is almost never granted, so it's not unexpected," he said.

"Although it's very confusing and most people are looking at the headlines saying "RIM loses this" or "RIM loses that," their legal position is better than it was six to nine months ago."

He said decisions for the lower court judge will include whether to reconfirm the injunction, whether to stay it pending review, and whether the earlier settlement was valid.

Sanderson said RIM may have helped its position by showing it was willing to settle, as courts prefer to see settlements in such cases.

He also noted that the U.S. Patent and Trademark Office (search) recently finished reexamining eight NTP patents and issued initial rulings rejecting 100 percent of the claims.

Those rulings are not final and NTP has said it plans to see the full reexamination process through, which could take years. Some analysts have said that until that process is complete, the patents remain valid in the eyes of the court.

Sanderson said that may not affect the lower court's decision, but could affect the size of any final settlement.