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San Francisco—Research in Motion Ltd., manufacturer of the popular BlackBerry wireless device, suffered another blow last week when an appeals court ruled that the Canadian company is infringing patents held by NTP Inc. But the case isn’t over yet. The U.S. Court of Appeals for the Federal Circuit offered Research in Motion (RIM) a chance to reverse the findings of infringement. The court said the district court had misconstrued one claim in the disputed patents. Since it was unclear whether the error prejudiced the jury and caused it to reach an infringement verdict, the appeals court said it was sending the case back to the district court to review that question. “On remand, if RIM can establish that the erroneous claim construction prejudiced the jury’s verdict as to the affected claims, the district court will have to set aside the verdict of infringement as to those claims,” Judge Richard Linn wrote for a three-judge panel of the Federal Circuit. In 2002, a federal court jury in Richmond, Va., found that RIM had committed willful infringement on all the claims in five patents held by NTP, a Virginia company created to protect the patents of inventor Thomas Campana Jr., who died earlier this year. The jury awarded NTP $23 million, a royalty rate of 5.7% of BlackBerry sales. The court subsequently increased the award to $53.7 million and issued a permanent injunction barring RIM from manufacturing or selling BlackBerry devices. The court stayed the injunction pending the outcome of the appeal. Fear of market withdrawal The case has drawn widespread attention from the patent bar, as well as from BlackBerry owners worried that the handheld devices-which allow users to e-mail, browse the Internet and talk on the phone-might be pulled off the market. Last year, the U.S. House of Representatives also jumped into the dispute. The House’s chief administrative officer, James Eagan III, sent a letter to lawyers for RIM and NTP asking that an injunction not be issued against the devices, stating that such an action would create “a serious risk to the House’s critical communications and could jeopardize the public interest.” The Federal Circuit’s decision focused on the definition of a BlackBerry component called an “originating processor.” The district court had defined it broadly as “any one of the constituent processors in an electronic mail system that prepares data for transmission through the system.” However, the appeals court defined originating processor more narrowly as “the sole processor that initiates the transmission of electronic mail message text into the electronic mail system,” separate from the gateway or interface switches. NTP’s counsel, James Wallace Jr., a partner at Washington’s Wiley Rein & Fielding, called the ruling “a tremendous victory for NTP.” Wallace said the Federal Circuit’s decision affects five of 16 claims that went before the jury. “We could throw out those five claims, and the injunction and damage awards are fully supported by the 11 remaining claims,” he said. Reason to cheer? But RIM attorney Henry Bunsow also found reason to cheer the ruling. “My initial reaction is favorable in that the injunction and damage awards have been vacated, and we will have further proceedings in Richmond,” wrote Bunsow, a partner in the San Francisco office of Washington-based Howrey Simon Arnold & White, in an e-mail message. “We need to study the decision in light of the lower court record to assess the full benefits of the reversal and remand.” While the Federal Circuit’s decision keeps the BlackBerry on the market for the time being, Wallace said it could be withdrawn at some point in the future. But mobile e-mail fans need not worry, he added. “There will be a wireless e-mail on the market,” said Wallace, “because we’ll do licensing with others.” At the request of a telecommunications industry trade group, the U.S. Patent and Trademark Office ordered a re-examination of the disputed patents in December 2002. That re-examination has not yet concluded.

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