Whither wireless e-mail?
It's not clear which companies will emerge the legal, and market, winners.
By Roger Parloff, FORTUNE senior writer

NEW YORK (FORTUNE) - One BlackBerry competitor who has sought to capitalize on the industry leader's current legal crisis was hit with its own patent litigation on Monday.

Good Technology, of Santa Clara, California, was sued by yet another competitor in the crowded wireless e-mail space, Visto Corp., of Redwood Shores, California, for allegedly infringing four of Visto's patents in the field. A spokesperson for Good said the company could not comment since it had not yet had an opportunity to review the suit.

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Good provides technology currently used on certain models of Palm Treo, HP iPAQ, and Motorola devices, among others. Visto is a so-called white-label provider, selling services to carriers, including Vodaphone (Research) and Cingular, which then resell it under their own brands.

Research In Motion (Research), the Waterloo, Ontario-based maker of the BlackBerry, is the market leading wireless e-mail provider by a wide margin, serving more than 3.5 million subscribers. It is currently facing the threat of a court-ordered shutdown after it lost a patent suit brought by NTP, an intellectual-property holding company that does not make products.

On February 24, U.S. District Judge James Spencer of Richmond, Virginia, is scheduled to hold a hearing on whether to enjoin RIM's BlackBerry operations. A jury's 2002 verdict that RIM had infringed patents held by NTP was largely upheld by an appeals court in December 2004, and the U.S. Supreme Court declined to hear RIM's appeal just last month.

RIM has claimed that, even if Judge Spencer does issue an injunction, it can implement a technological "work-around" that will enable it to continue to serve BlackBerry customers seamlessly without infringing NTP's patents; some observers are doubtful, however, that such a fix can survive judicial scrutiny, given the breadth of NTP's patents.

Though RIM is the clear Goliath in the wireless e-mail space, the remaining players in the field are hard to rank, since many are privately held and have different business models. They include Intellisync (now being acquired by Nokia), Good, Visto, Seven Networks, Infowave Software and Microsoft (Research).

After the federal appeals court upheld NTP's verdict, Nokia, Good and Visto all licensed NTP's patents, seemingly putting their customers out of harm's way. They then used their settlements with NTP as marketing tools, assuring the market that they have the capacity to absorb RIM's slice of the market while offering safe harbor from interruptions due to legal challenges.

But Visto also has a significant patent portfolio -- 25 patents granted worldwide and 57 pending -- that it has been aggressively seeking to assert. It has now filed five suits since late 2003: against Infowave, Seven Networks, Smartner Information Systems (later acquired by Seven Networks), and, just two months ago, Microsoft Corp. (All the suits have been filed in federal court in Marshall, Texas, near the Arkansas border -- a favorite venue among patent plaintiffs because cases go to trial quickly there and local juries are perceived to be sympathetic to patent plaintiffs.)

Since Visto has also licensed NTP's patents, its senior vice president for strategy Daniel Mendez suggests that it is now the safest wireless e-mail alternative from a legal perspective. "Companies that use our technologies have licenses to the two main patent portfolios -- NTP's and Visto's."

But others are not are not sure the market will see things that way. "The suit is likely to hurt both firms' opportunities," says emerging technology analyst Rob Enderle, of the Enderle Group. He believes the confusion engendered by all the litigation could hurt all the small players and redound to the benefit of another behemoth: Microsoft. Palm's new Treo 700w, for instance, runs on Microsoft software.

Analyst Gene Signorini of the Yankee Group says he's not willing to predict any winner from the currently turbulent litigation environment. He suggests, however, that the smart thing to do may be to explore the possibility of using more than one provider. "For such a mission-critical function," he says, "you want to have options. Companies don't want to be tied to a single vendor." Top of page

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