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BlackBerry Facing Trouble

If a patent infringement suit isn’t settled soon, several million devoted BlackBerry users might suffer withdrawal.
November 8, 2005

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).

Despite what it calls a “dark legal cloud” hanging over the company, the New York Times in a Nov. 3 review labeled the BlackBerry 8700c, coming out this month, “more habit-forming than ever.”

“Microsoft has been wanting to get into this market and hasn’t been able to crack it – that’s a testament to the kind of power RIM has,” says Null.

And of course there’s the well-known loyalty among BlackBerry users. “It’s with me 24 hours a day on my side,” says Ali Fatahi, an engineer with Northrop Grumman. “If I ever lost it I would lose my hair trying to keep track of everything.”

For Fatahi, “everything” means sending e-mails and checking his calendar several times a day, using the memo pad, and browsing the Web. If his BlackBerry was no more, he says he’d “replace it right away” with “a PDA with a calendar and e-mail support.”

One reason for such loyalty is the device’s basic software, which has remained much the same over the years, despite new features added since 1999. Back then, users could only send and receive e-mails – and even that function wasn’t fully synchronized with a PC. Now they can plan meetings on the fly, update tasks, and surf the Web.

Mark Rejhon, a software developer in Ottawa, has had a BlackBerry since 2001 (“when they were still called RIM Inter@ctive Pagers,” Rejhon says). He uses it primarily for e-mail, but also instant messaging, Web browsing, and as a “relay” service for making phone calls, since he’s hearing impaired.

“The BlackBerry is my main text communications device – I can do almost everything with it,” Rehjon says, adding that “it would be a major loss of independence for me if I was traveling in an unfamiliar city. If I ever got lost without the BlackBerry, I would be very dependent on Internet terminals or asking people for help to place phone calls.”

Like many dedicated BlackBerry users, Rejhon is aware of the lawsuit and confident that RIM has a backup solution. If he did have to give up his BlackBerry, though, he “would probably adapt to a [PalmOne] Treo unit.”

Meanwhile, NTP insists that RIM owes it at least $250 million. RIM officials say the company has set aside money for paying the NTP settlement if necessary, and claims it has an emergency backup plan should NTP try to enforce the injunction.

But the company might be wise to head off an emergency now, suggests Null. “I would think they need to start looking at a settlement,” he says.

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