Tuesday, November 08, 2005

BlackBerry Facing Trouble

If a patent infringement suit isn't settled soon, several million devoted BlackBerry users might suffer withdrawal.

By Paul Angiolillo

Imagine suddenly being deprived of a software program you depend on -- say, Word or Excel. And then it gets worse: you lose your laptop as well, and all your personal data and e-mail.

It's an unlikely scenario for most of us, of course. But it's not as far-fetched for more than three million users of the BlackBerry wireless e-mail and phone device.

Last month, the new Chief Justice of the U.S. Supreme Court, John Roberts, denied an emergency appeal by the manufacturer of the BlackBerry, Research In Motion (RIM). In doing so, he upheld a lower court ruling against RIM in a long-standing patent infringement suit.

The denial leaves the Canadian-based company with few options. On Wednesday, November 8, it will once again go to court with NTP Inc., which holds the disputed patent. And soon RIM will find out if it owes the much-smaller Virginia-based firm hundreds of millions of dollars in damages, as well as future licensing fees. Or it can settle.

And there's the third, Draconian option: If RIM doesn't settle or win, it could be forced to shut down its BlackBerry network.

That possibility could spread disruption far beyond the confines of RIM. "The BlackBerry is the de facto device for business users on the go; it's got a large, established base and the broadest support," says Christopher Null, former editor of Mobile magazine and editor of a guidebook for the BlackBerry.

If the BlackBerry service were no longer available, even temporarily, says Null, "you'd have all these Type-A personalities unable to stay in touch with the office. It'd be mass hysteria -- that's why they call it the 'CrackBerry'."

Many industry observers believe RIM will settle, probably by the end of 2005. For one thing, there's the recent trend among U.S. judges to uphold patent infringement claims. "The [U.S.] patent office has been reluctant to admit it's given out over-ambitious patents," says Null. "Even some of the most absurd ones have been upheld -- like the Amazon one-click patent."

And of course competitors, notably, the Treo and a new Motorola product, are waiting to step in if RIM falters.

Still, RIM has a huge amount of clout: an impressive 80 percent of all handheld e-mail devices in the United States are Blackberrys. RIM sold 2.3 million of the devices in 2004, operates more than 42,000 BlackBerry servers worldwide, and has cut licensing deals with the likes of Nokia, Motorola, Palm, Cingular, and Siemens (see "The Willing Partner," July 2005).