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BlackBerry owners may have breathed a collective sigh of relief when Research In Motion, the Canadian company that manufactures the ubiquitous wireless e-mail device, announced recently that it had agreed to pay $450 million to settle a patent infringement suit. The case dealt with whether a portion of a company’s business that operates in another country would be covered by U.S. patent law, a question that had captivated the patent bar. BlackBerry devotees had tuned into the dispute to see if the handheld devices — which allow users to send and receive e-mail, browse the Internet and talk on the phone — would be pulled off the market. “Because of the extraordinary popularity of the BlackBerry, it got more publicity than any patent case in history,” says James Wallace Jr., a partner at Wiley Rein & Fielding in Washington, D.C., who represented NTP Inc., the plaintiff in the case. “The case had very interesting scientific issues and challenging legal issues and interesting personalities on both sides of the table,” adds Wallace. “It’s probably the most exciting case I’ve ever handled.” Henry Bunsow, a partner in Howrey Simon Arnold & White’s San Francisco office who represented Research in Motion, says the settlement was purely a business decision on his client’s part. “It’s a large amount of money until you start looking at the market impact” on Research in Motion, says Bunsow. “The stock was quite depressed as a result of this, and now it’s not.” The $450 million payment gives the BlackBerry manufacturer, located in Waterloo, Ontario, a perpetual, fully paid license to NTP’s electronic mail system patents. NTP is a private holding company that was created to protect the patents of inventor Thomas Campana Jr., who died last year. The company demanded that Research in Motion purchase a license in 2000 and filed suit the following year. A federal jury in Richmond, Virginia, concluded in 2002 that Research in Motion had committed willful infringement and awarded NTP $23 million. The court later increased the award to nearly $54 million, based on a royalty rate of 8.55 percent of North American BlackBerry sales through August 2003. Research in Motion had continued to put money in escrow to cover royalties on later sales. Wallace says that $150 million worth of royalties had accrued by the end of February 2005. The Richmond court also issued a permanent injunction barring the ongoing sales of BlackBerry devices but stayed the ruling pending the outcome of the appeal. Three months ago the Federal Circuit U.S. Court of Appeals also found that Research in Motion was infringing NTP patents. But it gave the company a chance to continue battling over one element of the case. It said the lower court had misconstrued one claim and asked the district court to consider whether this would have prejudiced the jury’s verdict. Patent attorneys had also been closely following another aspect of the case: whether the Canadian company could escape an infringement claim since one component of its BlackBerry system was located outside the United States. Under U.S. patent law, infringement occurs only if the entire infringing process occurs within the United States. The Canadian government jumped into the fray, asking the Federal Circuit to reconsider its findings. The Federal Circuit said the BlackBerry was covered by U.S. law since “the beneficial use and function of the whole operable system assembly is in the United States.” Mark Lemley, an intellectual property expert at Stanford Law School, says he was sympathetic to the court’s finding “since so little of the invention was used abroad.” But he says people might feel differently if, for example, part of a U.S. invention was used in France and subject to French law. The case, says Lemley, “leaves a big hole in trying to figure out which precise U.S. laws will have territorial effect.” — Brenda Sandburg

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