Why we fight when we'd rather be e-mailing

The mobile data universe has been evolving and thriving at an increasingly rapid rate for the last year or so, but it's been a winter of discontent for the product vendors, applications developers and service providers that are all part of the mobile e-mail galaxy within that universe.

First came the news that Research in Motion had lost its appeal in the patent infringement lawsuit it had lost to technology developer NTP. A potential shutdown of RIM's wildly popular BlackBerry service seemed imminent. Weeks later, the U.S. Supreme Court declined to hear RIM's case, and suddenly the pressure was on for RIM to find a suitable workaround solution that also satisfied the courts as being sufficiently independent of NTP's patents. Meanwhile, another push e-mail vendor, Visto, filed a lawsuit against Microsoft that alleged the software giant's Windows Mobile 5.0 infringed on its patents. Just over a month later, Visto sued competitor Good Technology for patent infringement.

These legal troubles carry on a legacy of lawsuits that have occurred since the earliest days of mobile e-mail innovation. RIM filed a patent infringement suit against Good Technology in 2002 that was later settled. In 2003, Visto sought an injunction against Seven for patent infringement, but the claim was later rejected.

And the beat goes on. Defywire, a developer of a non-proprietary push e-mail system, is currently embroiled in its own lawsuit. The 3-year-old Herndon, Va., company last year received Patent 6,891,860 from the U.S. Patent and Trademark office for the “method and apparatus for establishing multiple bandwidth-limited connections for a communications device.” In plain English, that means Defywire's technology enables a single communications channel used to support the transfer of information via a wireless carrier to the user device, to then be split into several different uplink and downlink channels, each of which can be used to simultaneously support a different application, according to Defywire.

The company also is about to be issued a second patent and believes the “trade secret” that was the precursor to the pending patent was violated “early on” in the company's development of the technology by someone who no longer works for the firm, said Jill Stelfox, chairman, CEO and co-founder of Defywire.

Defywire filed a lawsuit alleging infringement on that trade secret, and though Stelfox declined to discuss further details of the pending litigation, the case probably will go to trial in a Virginia court sometime this May.

“We try to keep tabs on our intellectual property, but sometimes it's difficult to make sure that infringement isn't happening,” Stelfox said. “When it does, it's your work that's at stake, and you have to do what you can to protect it.”

That's the attitude that many companies have had before and since the NTP/RIM patent infringement case. And although it's necessary to protect the revenue, hard work and ambitions of companies that should get credit for their innovations, technology sectors like the mobile e-mail ecosystem are turning into a microcosm of the lawsuit-happy culture of our modern society.

However, Stelfox said that it's a situation that many companies are forced into and, in fact, have come to expect as part of the process of applying for and being awarded a patent. “The patent office really forces us into these kinds of situations because of how they award patents and how long it sometimes takes for them to be awarded,” she said.

The patent office also has come under fire in the NTP/RIM case. Before RIM's appeals in the case were rejected, another federal judge separately ruled that the NTP patents at the heart of the case had been awarded in error.

THE PATENT OFFICE has long battled an image of being over-worked, slow and not fully up to the task of making important judgments about very complex technology patents. During 2005, the agency received 406,302 patent applications and 323,501 applications for trademark registration, according to the agency's Web site. The office awarded 165,485 patents during that year. (Just last week, the office awarded the long-awaited patent No. 7 million in its 216-year history.) In 2005, legislation called the Patent Reform Act of 2005 was introduced in Congress. It was the culmination of the pleas of individual companies and previous legislative efforts to improve the patent process by redefining it, curbing damages awarded for infringement and other measures. Other proposals for helping the office include raising the patent application cost, re-investing more funds from application fees directly into the agency and hiring more examiners.

The patent office also is continuing to reform its processes by attempting to put more metrics in place that will help the company measure the viability of specific patents, according to agency officials who spoke to patent attorneys at a recent “town hall” meeting in Chicago.

“Improving the patent process will take everyone working together — applicants and the USPTO,” noted Jon Dudas, under secretary of commerce for intellectual property and director of the U.S. Patent and Trademark Office. “Better-quality applications mean better examination. We need more focus throughout and closure to the examination process.” (Comments from Dudas and others at that meeting can be found online at www.promotetheprogress.com.)

Stelfox said she is hopeful that experience will do the rest. “Over the next two years, I think you will see this problem of too many lawsuits be resolved, and that will happen because the patent office will become more educated about this sector of the technology industry.”

At some point, the pileup of lawsuits and accusations seems as though it would be a distraction for the companies involved. The cost of legal action and protection could be significant, especially for the small companies developing single systems, processes or applications that are at the core of the evolving mobile e-mail world. But as a distraction from other items on the business agenda, including ongoing product innovation and daily operation, legal fights could prove doubly dangerous.

“It's a shame to have this many lawsuits going on,” said Paul Fulton, president and CEO of Orative, a company that offers mobile phonebook client software that is compatible with devices that include the BlackBerry and other handsets. “I think that CEOs should be operating in a forward stance and be focused on winning business rather than having to operate in a defensive stance.”

“Patent infringement is a reality in the wireless space,” Stelfox said. “It's an operating distraction, yes. There are only so many fights that you can pick. Though in a way, it also has a value because it ultimately shows people the value of what's being developed in this space and how important it is.”

THOUGH LEGAL ACTION represents some companies' efforts to protect the value of innovation, the prospect also could be intimidating for new companies looking to get into the mobile e-mail business or the next wave of imaginative thinkers poised to dream up the next wave of innovations.

“For a new company to come into this space right now, it's going to be tough,” Stelfox said. “It may be too late for them.”

Fulton said Orative purposely did not pursue development of mobile e-mail applications because the company wanted to stay out of what it already felt was a market fray. Now, the occurrence of so many lawsuits and the judgment in the NTP/RIM case “could cause some users to think twice about the device and service that they want to use.”

For now, it remains unclear how the current spate of lawsuits will affect competition for mobile e-mail users. Industry watchers have speculated that a BlackBerry shutdown could be disastrous for RIM. A federal judge will decide this week if that must happen, though RIM last week told the Wall Street Journal that it had devised a sufficient workaround solution that had been approved by legal experts.

Iain Gillott, principal analyst of iGillottResearch, recently completed a survey of BlackBerry users and found that they are loyal to the e-mail service, despite RIM's legal hassles.

“For those vendors looking to compete with RIM's BlackBerry e-mail service, the news from this survey is not good: BlackBerry users are satisfied and loyal,” he said in discussing the results in a recent newsletter.

Still, companies such as Defywire say they are already seeing some interest from BlackBerry provider and user bases that may be shell-shocked.

Carriers have distanced themselves from the patent infringement controversy. Two carriers contacted for comment for this story declined, both said they didn't want to endorse one vendor's technology over another.

Most carriers actually have been well-positioned by their early decisions not to pursue only one service or device path to offer mobile e-mail. “Carriers have to think broadly, and I think they understand now that they can't rely on sole-vendor relationships,” Stelfox said. “It's just a cost of doing business.”

PATENTS UNDER PRESSURE

NOVEMBER 2001

NTP sues Research In Motion, alleging patent infringement.

JUNE 2002

RIM sues Good Technology for patent infringement.

SEPTEMBER 2002

Good Technology files court complaint seeking declaratory relief from RIM patent lawsuit.

JULY 2003

U.S. Circuit Court judge rules in favor of NTP.

SEPTEMBER 2003

Visto files patent lawsuit against Seven.

FEBRUARY 2005

Visto sues Seven subsidiary Smartner.

APRIL 2005

Microsoft, Oracle, other companies begin to call for reforms in the patent process.

AUGUST 2005

Congressman Lamar Smith (R-Texas) becomes lead sponsor of the Patent Reform Act of 2005

SEPTEMBER 2005

U.S. Patent and Trademark Office rejects NTP patents at heart of case, says they shouldn't have been awarded.

DECEMBER 2005

U.S. District Court judge lets NTP injunction against RIM proceed; Visto sues Microsoft.

JANUARY

U.S. Supreme Court twice declines to hear RIM/NTP case.

FEBRUARY

U.S. District Court judge on Feb. 24 will consider viability of RIM's work-around, possible re-imposition of injunction.