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CyberiaRIM versus NTP
By JACK KAPICA
Wednesday, January 11, 2006 Posted at 5:15 PM EST
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Soon, the sorry drama involving Research in Motion and NTP will come to a head as the five-year-old patent suit heads to U.S. court, where a judge has promised to settle this brouhaha once and for all. Perhaps the judge will go as far as to shut down RIM's operations in the United States.
That would be "unthinkable," as reader Cedric Vanhaver said in an e-mail message to me the other day.
But could it happen?
Frankly, I doubt it.
For NTP, a company that makes nothing but tries to exploit the patents it owns by licensing them, shutting down all the Blackberries in the United States would conceivably be the worst possible outcome. The Blackberry is a goose laying a golden egg, and NTP won't be very happy with the outcome if it strangles that bird in the courts. If NTP shuts RIM down, NTP will get nothing from RIM, except perhaps the comfortless knowledge that the U.S. courts are willing to enforce NTP's narrow (and questionable) interpretation of its claim. And there's little profit in this kind of victory.
Such a victory would lead to an even bleaker prospect for NTP: The company already has a reputation for being outrageously litigious — it's a boiler-room full of lawyers, after all — and it's hard to see tech companies wanting to do business with NTP in the future. True, two small companies have sided with NTP: an e-mail startup called Visto, in which NTP already has a stake, and Good Technology, which has signed an agreement to sell an equity stake to NTP as well. But those two would become also-rans very quickly to an outfit like Nokia, which has licensed NTP technology for the past year and a half.
Besides, if the court does block RIM from of the U.S. market, no tech company would be foolish enough to make a technology that in any way resembles the one so vaguely described in NTP's patents. There are several other technologies out there that do the same thing, and going with one of them would be much smarter than tangling with these guys.
The next-worst scenario for NTP would be to award the case to RIM. This, too, will also get NTP nothing. And I can't see RIM wanting to put the gloves back on after all this time, and offer a settlement to NTP as a gesture of good will or something like that.
The best possible outcome for NTP is to have the court impose a settlement, and hope that RIM will pay it. Perhaps to accomplish this, the court could impose a settlement that would be lower than the one the two companies agreed to last year. That way, it could reinforce NTP's tenuous legal position.
But the U.S. Patent Office has been systematically rejecting NTP's patent claims, and there's a very real possibility NTP will end up without any legal basis for its case.
And if that happens, I can't see RIM going along with any kind of royalty payment to NTP.
Part of the problem is that NTP has almost nothing to lose and, like a death-row inmate, it is playing its hand as viciously as possible. As a patent-holding company, it has few assets outside of its portfolio of patents and a handful of licences. If NTP loses, it might have to give up those assets, but for that to happen those assets would have been judged next to worthless anyway. NTP has no real estate, no product line, no customer base and no manufacturing behind it — just a bunch of lawyers who, if they lose, would simply turn elsewhere for employment.
Ultimately, NTP appears to be way over its head with RIM. Suing RIM might have started out as a simple shakedown to get RIM, at the time an up-and-coming company, to pay up by making an argument that stretches the intent of recently revised American patent law. But then RIM put up an unexpectedly spirited fight, and NTP found itself in a confrontation it didn't expect. Now it has no exit strategy, except — as Harry Flashman is fond of saying — "to brazen it out."
Mr. Vanhaver, the reader who wondered whether the unthinkable could happen, also noted that Nokia had recently bought Intellisync, a company with its own process of delivering e-mail wirelessly. Why, he asked, would Nokia do that?
I can't pretend to impute a motive to a corporate acquisition, but I suspect Nokia is simply hedging its bets — it is already an NTP licensee, and also a Blackberry licensee. Buying Intellisync could prove to be a profitable acquisition if RIM were to be shut out of the American market, or even so damaged that its market position would be weak enough for Nokia to enter the field.
But RIM has been wise in its marketing strategy, and has managed to get a market share and a product image that most tech companies would kill for. And even under siege with the prospect of being shut down by the courts, RIM is still a formidable presence commanding the market.
RIM also dropped a hint in November that it has a "workaround" technology up its sleeve that would skirt the NTP patents at the centre of the court case.
Either way, RIM wins. It's just a matter of how much NTP will lose.
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