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Things weren’t looking good for Research in Motion, the Canadian maker of BlackBerry handheld electronic devices. First came a $23 million patent infringement verdict from a jury in the U.S. District Court for the Eastern District of Virginia in November. Then there were the post-trial motions (still pending) for treble damages and a ban on BlackBerry operations in the United States. But in a series of unusual twists, U.S. Patent and Trademark Office Director James Rogan and BlackBerry devotees in Congress have thrown Research in Motion a lifeline — and thrown the case into disarray. Rogan has ordered a re-examination of five patents — four of them central to the lawsuit — belonging to NTP Inc., the Arlington, Va.-based holding company suing for infringement. Such director-ordered re-examinations are extremely rare and may convince U.S. District Judge James Spencer to stay the litigation for a year or more while the PTO conducts its review. Equally improbable, the U.S. House of Representatives on Jan. 16 inserted itself into the case when Chief Administrative Officer James Eagan III sent a letter to lawyers for both sides pleading for them not to take Congress’ BlackBerrys away. “Not only do members and staff depend on the BlackBerry service for daily communications and business operations, the House relies on the device for notifications and communications in emergency situations,” wrote Eagan, noting that the House has issued 3,000 BlackBerrys and invested $6 million in the technology. An injunction on BlackBerry service, he wrote, would create “a serious risk to the House’s critical communications and could jeopardize the public interest.” The dispute began in January 2000, when NTP, a private holding company created to protect the patents of Chicago-area inventor Thomas Campana Jr., sent Research in Motion, or RIM, a letter. In the letter, NTP expressed interest in licensing its patents to the BlackBerry maker. RIM claims to have written back asking for more information on the relevancy of NTP’s patents, and heard nothing from the company until November 2001, when NTP filed suit for patent infringement. But NTP testified at trial that the company never received any such letter. “They had the opportunity to license, and they passed,” says NTP lawyer James Wallace Jr., a partner at Wiley Rein & Fielding. “They decided to bet the company, and the bet didn’t come out right.” The five disputed patents relate to the use of radio frequency wireless communications in e-mail — a central element of the BlackBerry service, which gives users remote access to e-mail and corporate data. The case went to trial before Richmond, Va.-based Judge Spencer, running from Nov. 4 to Nov. 21, 2002. It took the jury just five hours to find RIM guilty of infringement, awarding damages of $23.1 million, or 5.7 percent of BlackBerry sales. RIM, represented by a team from Jones, Day, Reavis & Pogue led by Cleveland partner Robert Kahrl, argued unsuccessfully that NTP’s patents were invalid. But that claim took on renewed force after PTO head Rogan ordered the re-examination of NTP’s patents on Dec. 26. According to the PTO, there have been just 146 director-ordered re-examinations since the procedure was created in 1981. That’s an average of seven a year — a minuscule number compared with the 177,000 patents granted in 2002 alone. For a re-examination to occur, the PTO must possess prior art — material that proves or disproves an invention’s novelty — indicating that an invention is invalid. Further, the PTO must either suspect internal error, such as negligence on the part of an examiner, or, less commonly, initiate the review in response to an uproar from an industry or the public. In NTP’s case, a PTO spokeswoman says, the re-examination is based on the prior art and the concern expressed by the telecommunications industry. Among the groups registering protest was the Cellular Telecommunications & Internet Association, which sent a letter to the PTO urging review. When a patent is re-examined, it is assigned to a new examiner, who reviews the prior art. The process usually takes 12 to 14 months, and few patents survive unscathed. On average, according to the PTO, all claims are cancelled 18 percent of the time, one or more claims are changed 68 percent of the time, and all claims are upheld just 14 percent of the time. “In our view, [the re-examination] corroborates much of the invalidation defense,” says RIM co-counsel Henry Bunsow, a partner at Howrey Simon Arnold & White in San Francisco brought on to assist with post-trial motions. “The pieces of prior art relied on by the Patent Office enhance our argument that the prior art deserves more attention.” But NTP’s lawyer James Wallace downplays the significance, noting that NTP’s oldest and broadest patent, No. 5,436,960, is not subject to PTO review. “The other four could go down the tubes, and we’d be fine based on that patent,” he asserts. The next round in the battle will take place Feb. 28, when Judge Spencer hears post-trial motions for treble damages and a permanent injunction against BlackBerry. Wallace argues that after receiving NTP’s letter, RIM has been willfully infringing the patents and is liable for an additional $35 million in damages. He also wants $4.5 million for attorney fees plus interest, for a grand total of $73 million. NTP has also asked for a permanent injunction shutting down all BlackBerry service and sales in the United States. Typically, a BlackBerry retails for around $399, plus a $40 monthly fee for wireless service. The prospect of no BlackBerry service triggered the letter from House of Representatives administrative officer Eagan, who could not be reached for comment. While Eagan wrote that the House has no knowledge or opinion on the underlying merits of the case, he “strongly urge[d] that this matter be resolved without the proposed injunctive relief.” In a Jan. 16 reply, Wallace wrote Eagan that “your letter — which RIM certainly will provide directly to the Court — strongly suggests support of a Canadian corporation already found to be willfully infringing the U.S. patent rights of a Virginia company.” Wallace also assured the House that NTP is “more than willing” to work with them to avoid disrupting communications. NTP is currently negotiating with other companies to license the patents. Still, the threat to shut down BlackBerry may prove to be a litigation bluff, notes Brad Hulbert, a name partner with Chicago IP boutique McDonnel Boehnen Hulbert & Berghoff, who has been following the case. “NTP has little to gain from obtaining an injunction and, thus, effectively putting RIM out of business,” says Hulbert, who also serves as lead patent litigation counsel to Palm Inc. “However, its financial interests are best served by convincing RIM that it will get such an injunction if RIM doesn’t pay it enough.”

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