Supreme Court won’t intervene in BlackBerry dispute

The Supreme Court Monday refused to hear a case involving a multimillion-dollar patent infringement fight between the makers of the BlackBerry communications device and a Virginia patent holding company.

Canada-based Research In Motion had asked the justices to decide whether U.S. patent law could apply to devices operating partially outside of the United States. Part of the BlackBerry network operates outside of the United States, and messages are routed through this system -- even though the users on both ends of the messaging system are located inside the country.

The decision increases the pressure on BlackBerry-makers RIM to settle its long-running dispute with Arlington, Va.-based NTP Holdings, and could significantly increase the amount of money that RIM had previously agreed to pay, said one longtime observer.

"Basically, RIM has to figure out a way of either getting [U.S. District] Judge [James] Spencer to issue his injunction, and put it on stay pending Patent and Trademark Office developments, or they're going to have to settle," said Paul Devinsky, a partner at the law firm of McDermott, Will & Emery. "I'm sure the number now is more like a billion, it's no longer like $460 million."

NTP has asked a federal district court to block RIM's further marketing and support of the infringing components in the United States. If the judge agrees, private sector users of BlackBerrys could see their service go dark if RIM does not settle the case. This means that several million users -- both on Wall Street, and possibly in Congress -- could see their service shut down.

NTP has suggested that a court-ordered shutdown would not affect federal government users -- along with others whose use of the service is deemed essential -- if RIM created a "white list" of what has been estimated to be more than one million of the service's 4 million users.

But RIM has argued that any injunction would harm government and other users in critical sectors of the economy, and said in a court filing last week that it would be "extraordinarily difficult, if not impossible" to separate government and emergency users if NTP was successful in obtaining a court-ordered shutdown of service in the United States.

"Needless to say, the formidable logistical difficulties presented by having to identify and verify the continuing status of 'excluded or included' users from among the tens of thousands of government agencies, government contractors and subcontractors, and other companies and organizations that would be, or should be, exempt are prohibitive," the filing stated.

The Justice Department filed a brief with the court in mid-November asking for a delay in the event of a shutoff so that government workers' use of the devices would not be interrupted.

The two sides are now scheduled to submit further filings in early February, after which Judge Spencer of the Virginia Federal District Court will schedule a hearing to determine whether the court should issue an injunction.

RIM has said it is working on a software alternative to maintain BlackBerry service if necessary. RIM also has asked the PTO to re-examine the validity of the patents at issue. The office has already issued a preliminary ruling rejecting the validity of all of NTP's patents.

Early last year, the two companies had reached a tentative settlement of $450 million that RIM was scheduled to pay NTP to settle the case. But the deal fell through, and Spencer declined to enforce the terms of the settlement last November.

Spencer has also stated he intended to move swiftly to end the litigation between the two firms and not to delay any other pending decisions.

A RIM representative Monday remained optimistic on its chances of avoiding the settlement.

"RIM has consistently acknowledged that Supreme Court review is granted in only a small percentage of cases, and we were not banking on Supreme Court review," said Mark Guibert, RIM's vice president of corporate marketing in a statement. "The Patent Office continues its re-examinations with special dispatch, RIM's legal arguments for the District Court remain strong, and our software workaround designs remain a solid contingency."

Daniel Pulliam contributed to this report.

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