Imagine this: a tiny company called Professional Patent Plaintiffs sues your local water department, claiming to own a patent on the idea of water pipes. The company asks the court for an injunction that would shut down your city’s entire water system.
The court somehow rules in the company’s favor and grants the injunction. The ruling is upheld on appeal – even after government patent officers express doubts about the patent’s validity.
The water department, attempting to stave off a shutdown, agrees to pay an outlandish sum to PPP in licensing fees and damages. That agreement falls apart when department officials get cold feet, but later the water department tries to put the settlement back together, fearing the alternative – enforcement of the injunction.
The department asks the court to enforce the settlement. The court denies this request, as well as a request for another delay of the injunction, and water officials are forced to lay plans for a bucket brigade to deliver the water for your next bath.
This fictional scenario more or less parallels the recent experiences of Waterloo, Ontario-based firm Research In Motion (RIM), except that RIM delivers wireless e-mail messages, not water. It’s a case of patent litigation gone freakishly wrong, and it could end up isolating millions of people who depend on wireless information services as much as they depend on other utilities.
RIM, of course, makes the cult-hit BlackBerry wireless pager and e-mail device, and has been embroiled for years in a legal battle with NTP, an obscure intellectual-property firm in northern Virginia, over alleged violations of NTP’s patents on the idea of wireless delivery of e-mail via pager networks.
On November 30, a district court in Virginia said it would not enforce a $450 million settlement agreement reached between RIM and patent-holding company NTP in March. It also refused to delay NTP’s injunction until officials at the U.S. Patent and Trademark Office have finished their investigation of the NTP patents. That opens the way for NTP to proceed with the injunction and force a shutdown of RIM’s wireless network in the United States, where most of RIM’s 4 million BlackBerry subscribers live.
TR’s Paul Angiolillo wrote about the prospect of ”BlackBerry withdrawal“ in early November, when the U.S. Supreme Court refused to hear RIM’s appeal for a stay of NTP’s injunction, and the following week I blogged about the unfairness of the Federal government’s exemption from the potential shutdown.
I’m discouraged by the latest ruling from the increasingly testy U.S. District Judge in the case, James Spencer. It seems to show more impatience than understanding.
My argument is this: no judge would shut down an essential utility such as water, electricity, or the telephone network, no matter what the strength of an intellectual-property claim against it. RIM’s BlackBerry network has become an essential utility; if it weren’t, the federal government wouldn’t be so desperate to keep its thousands of BlackBerries running. Therefore, it can’t be shut down. NTP’s claims must be resolved some other way.
In a press release responding to Spencer’s ruling, RIM says it’s building “software workaround designs” that could keep BlackBerry service running in the United States even if the company is forced to stop using the parts of its system that supposedly infringe on NTP’s patents. It hasn’t detailed those designs, but implementing them would no doubt be expensive and disruptive.
How did things get so out of hand? Law.com has published a wonderfully detailed history of the case suggesting that RIM was too arrogant from the start, refusing to negotiate with NTP early on and then mistakenly believing it could wear NTP down through repeated, time-consuming appeals and legal maneuvering.
Perhaps. But it seems equally arrogant of NTP to press an injunction that would harm millions of BlackBerry users, when its real beef is with RIM. And it’s arrogant of the court to presume that it knows better than the Patent Office whether NTP’s patents should have been granted in the first place.
What should be a gentle negotiation has turned into a massive contest of wills. And it’s looking like the only certain losers will be consumers.