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NTP Inc. and Research in Motion (RIM) recently settled their protracted dispute over continuing use of the BlackBerry, the popular wireless messaging device. RIM paid NTP $612 million in cash to settle on terms that RIM favored and to avoid an injunction that would have stopped millions of U.S. customers’ BlackBerry usage. This disposition by private settlement leaves unresolved many legal and public policy issues raised by the half-decade-long, sharply contested litigation. NTP sued RIM five years ago, claiming that the mechanism produced by the Canadian corporation infringes upon NTP’s patent rights. In a 2002 trial, jurors found that RIM had infringed on NTP’s patent rights. Chief U.S. District Judge James R. Spencer of the Eastern District of Virginia then required RIM to pay NTP $54 million in cash and a royalty of 8.5% on all U.S. BlackBerry sales. More relevant for BlackBerry owners was that the judge ordered an injunction that would halt U.S. service and sale. However, in 2002, Spencer suspended that injunction, pending appeals. RIM took the case to the U.S. Court of Appeals for the Federal Circuit, which affirmed most of the district court determinations in December 2004. The next year, the Supreme Court denied RIM’s petition for certiorari, thus returning the dispute to Spencer, who heard arguments on NTP’s renewed request for an injunction at a Feb. 24, 2006, hearing. While RIM was appealing, the litigants pursued other remedies. RIM asked the U.S. Patent and Trademark Office (PTO) to reexamine the legitimacy of NTP’s patent rights, and the PTO preliminarily rejected certain NTP patents and finally rejected two during the week of the recent hearing. However, final PTO resolution might consume years, and Spencer suggested he was not disposed to wait. This litigation fueled mounting concerns among BlackBerry subscribers that their service would abruptly end. The United States had asked for a special exception, if an injunction issued. RIM announced development of a “workaround” that would permit continued service without use of NTP’s patented technology. However, some questioned whether that concept was viable, and NTP challenged this strategy in court. After Spencer heard four hours of argument, he took the matter under advisement. He stated that he would first issue a decision on the damages and then rule on imposition of an injunction. At the hearing’s end, he pointedly asked why the litigants did not cooperate better to devise a solution on their own terms as a business decision, rather than depend on the court to impose a legal decision. Despite the March 3 settlement of this protracted litigation and Spencer’s careful handling of the case, its conclusion leaves unresolved several complex questions. One overarching issue is whether the system for resolving patent infringement claims best serves the litigants, the judicial process and the public interest. Patents could end up rejected Numerous specifics comprise that general question. One is whether lay juries are the best fact-finders to decide the complicated issues posed by patent litigation. A second is how to reconcile the needs of litigants in infringement cases with the needs of the ongoing patent-approval process. Numerous observers, including members of Congress, believe the PTO acts too slowly in part because it receives so many applications. Moreover, this litigation illustrates the difficulties created by parallel regimes operating on different time frames. For instance, it is ironic that the PTO may ultimately reject every NTP patent application, even though the jury found RIM liable for patent infringement. Another issue is which remedies are most appropriate when federal courts find that patents have been infringed. An imposition of an injunction on RIM would arguably have harmed millions of innocent BlackBerry users. The high court may resolve this issue later this year in an unrelated case A fourth issue is who is the best judicial decision-maker. Despite Spencer’s astute treatment of the BlackBerry litigation, most generalist district judges rarely resolve these cases. Moreover, it is unclear that the Federal Circuit is the ideal “final” decision-maker. This court’s liberalization of patentability generally, and for software in particular, may have encouraged the BlackBerry litigation. Given the difficult character of these questions, the federal courts should attempt to solve them. If they are unable to reach satisfactory resolution, Congress might intervene and pass a statute. Indeed, lawmakers are currently considering the Patent Reform Act of 2005, which would revamp half-century-old patent law, mainly by reforming the application process; Congress may wish to include the questions above in its review. Carl Tobias is the Williams Professor at the University of Richmond School of Law.

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