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Judge gives RIM one last chance

From Saturday's Globe and Mail

Richmond, Va. — A U.S. judge has scolded Research In Motion Ltd. C for refusing to concede defeat in its long-running patent feud over the BlackBerry — but his decision to give the Waterloo, Ont., company one last chance to settle its dispute also sent RIM's stock higher.

RIM shares shot up over $90 yesterday before closing at $84.99, up 6.2 per cent on the Toronto Stock Exchange, after U.S. District Court Judge James Spencer postponed a decision to shut down more than three million BlackBerrys across the United States. The stock had lost nearly 20 per cent of its value Thursday amid concerns Judge Spencer would slap an injunction on the Canadian tech company.

The delayed decision appears to be part of a last-ditch effort by Judge Spencer to coax RIM and its rival, patent holding company NTP Inc., C into a deal.

"I am surprised, absolutely surprised, that you have left this incredibly important decision to the court," Judge Spencer said at the conclusion of a four-hour-plus hearing in Richmond, Va.

"This was really a business decision, but you have left it in the legal arena and that's what you are going to get — a legal decision. The case should have been settled."

Judge Spencer said he would take "a reasonable amount of time" to set damages in the case and then make a decision on NTP's request for a suspension of BlackBerry service and ban on sales in the United States. The first part of his two-step ruling could come as early as next week, RIM lawyers suggested.

"Judges always try to find ways to urge the parties to reach a resolution," Martin Glick, a patent lawyer for RIM, told reporters outside the courthouse.

NTP said in a statement it had tried to meet with RIM this week. "We want all BlackBerry users to know that we have repeatedly attempted to settle this issue with RIM."

The judge seemed to come down hardest on RIM, which he said still refuses to acknowledge its 2002 court loss to NTP. Nothing RIM has done — all the lobbying, patent re-examinations and appeals — has "changed the reality of the jury verdict," the judge pointed out.

"The hallmark of sanity is to remain firmly tethered to reality. One unfortunate reality for RIM that they want to forget is that there was a trial." He added: "When all is said and done, RIM infringed on NTP's patents."

The hearing is the latest twist in a saga that began in 2001, when NTP warned RIM that it was infringing on its patent for a nationwide wireless e-mail system. A year later, a Virginia jury found RIM guilty of infringing on five patents belonging to NTP, a company set up by a Chicago inventor, Thomas Campana Jr., and his Virginia law firm. The jury awarded NTP damages, court costs and a 5.7-per-cent royalty on all sales — a $126-million (U.S.) bill and counting. NTP balked at a $450-million settlement last year, and a deal now could top $1-billion.

RIM later lost on appeal, and failed to persuade the U.S. Supreme Court to review the case.

On the steps of the courthouse, a defiant RIM co-chief executive officer James Balsillie accused NTP of trying to extort a "princely sum" for patents he says are worthless.

"It's time for all this posturing and game-playing to end," Mr. Balsillie told a throng of reporters on the steps of the federal courthouse in Richmond. "We're not interested in a non-settlement settlement."

The two sides are in the midst of mediation and offers have gone "back and forth" in recent weeks, RIM lawyer Henry Bunsow acknowledged. But he said talks have stalled because NTP won't agree to a licence that would give RIM clear ownership of the technology.

After issuing a flurry of statements in recent days, NTP's legal team ducked out of the courthouse yesterday without commenting.

During the proceedings, NTP's lead lawyer James Wallace likened RIM to a freeloader living in someone else's house without paying rent. "It's time for RIM to pay up," he said. "What we have is a squatter — a squatter in your nice house."

Mr. Wallace said it's now clear that "RIM isn't going to do anything without an injunction."

The late Mr. Campana's son Tom said he was not surprised by the judge's decision. "It's still not over until it's over."

© The Globe and Mail

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