Visto on the legal warpath

Visto last week claimed its first legal victory in its string of lawsuits against wireless e-mail providers. A Texas jury awarded it a preliminary $3.6 million award against Seven Networks. Though the judgment was small, Visto has a bigger payday in mind: It's going after RIM.

Visto has sued Seven, Good Technology, Microsoft and Sproqit — all mobile e-mail competitors — but in market share terms, they all pale in comparison to Research in Motion. The company's recent settlement with holding company NTP cost it $612.5 million, a huge outlay of money that dwarfs any possible award from any of the other e-mail providers. In fact, the Seven lawsuit may have been just a stepping-stone. According to Seven, Visto showed no interest in trying to settle out of court, choosing instead to bring the suit to trial.

“We believe we were never infringing on Visto's patents, but we're also very pragmatic,” said Kent Thexton, president and CEO of Seven. “We would have been very open to a settlement so we could have moved on with our business. As it is, we spent more on legal fees than on the final [jury award].”

In its case against RIM, Visto is looking to adopt the same strategy NTP adopted — press its patents and ask for an injunction on all sales of BlackBerry products and a shutdown of the associated e-mail service. Thanks to the Seven verdict, said Visto CEO Brian Bogosian, the company has an even stronger case now that its patents claims have been validated in court.

“There was no ambiguity in the jury's decision,” Bogosian said. Visto expects the same result in the case against RIM, he said.

RIM has responded by filing a countersuit against Visto, bringing its own extensive patent library to bear against the smaller company. To media outlets, RIM executives have declared Visto's actions a “brazen strategy” to sue every mobile e-mail provider. It may be brazen, but according to intellectual property attorney Ronald Schutz, it's also smart.

The wireless e-mail space is crowded now. With RIM so clearly dominant in the space, some companies are going to try to compete with their intellectual property, much like NTP did, either by licensing their technology to competitors or by driving them out of business, said Schutz, who heads up the intellectual property litigation practice for the firm of Robins, Kaplan, Miller & Ciresi.

Although suing Seven didn't give Visto much in the way of a windfall or a licensing deal — Seven said it is using a software upgrade that will bypass Visto's patents — it now has legal ammunition to take to court against other providers, Schutz said. The problem is it won't receive those windfalls from small providers, but in suing them, it also risks undoing the benefits of the Seven verdict by submitting its patents for re-examination, Schutz said.

“The strategy against RIM is payday,” Schutz said. “In going after a smaller player, it established its patents and achieved a favorable ruling, which will both help in the RIM case, but if it sues another small player, it risks getting its patent tossed out.”