RIM gains ground in patent case litigation

Research in Motion this week got a reprieve in its ongoing intellectual property battle with NTP over the core push e-mail technology powering its BlackBerry messaging platform. The U.S. Court of Appeals for the Federal Circuit in Washington, D.C., today reversed its own ruling that RIM had infringed on NTP’s patents, offsetting the chances NTP can successfully win an injunction against RIM to stop selling its BlackBerry devices and service.

The win was only a partial one though. The three-judge panel from Federal Circuit reversed a December ruling that RIM had infringed on 6 claims to NTP five technology patents, but it upheld infringement on seven claims. Of the 16 claims that NTP successfully argued infringement, the Federal Circuit has tossed nine out. The remaining seven claims relate to intellectual property used in operation of RIM’s e-mail system. According to RIM, two of those claims have already been rejected by the U.S. Patent and Trademark Office and the remaining five are all related to single patent that is also under review the Patent Office. NTP officials, however, say they plan to appeal the Patent Office rulings.

More immediately significant to RIM, the court upheld its earlier decision to toss out the injunction and $23 million damages award imposed by the federal district court that originally heard the case. Such an injunction could have immediately halted all U.S. sales of BlackBerry devices, servers and software, which would have crippled the vendor. The Federal Circuit sent the case back down to district court where Judge John Spencer will reconsider the injunction against RIM.

Though the litigation is far from settled, RIM’s new leverage may bring the two companies back to the negotiation table. In MarchRIM and NTP brokered a settlement for $450 million, but the deal fell apart for unknown reasons. NTP appears to have backed away from the deal as RIM asked the courts in June to enforce the settlement.

The ongoing litigation has dragged down RIM’s financials since the suit was filed in 2002. RIM’s earnings for the last quarter (RIM’s 1st quarter, ending May 28) took a $6.5 million hit from litigation costs. Then the effect was minor as it posted net profits of $132.5 million, but in the previous fiscal year litigation costs amounted to $352.6 million, which after adjustments and tax considerations almost halved its $414.5 million profit to $213.4 million.

While the litigation has affected earnings, it certainly hasn’t affected sales. RIM broached the 3 million-customer mark in May, adding 592,000 customer’s last quarter, a 24% quarter-over-quarter increase.