Judge: No BlackBerry shutdown, yet
But judge says he will issue a decision on an injunction 'as soon as reasonably possible.'
NEW YORK (CNNMoney.com) - A judge spared millions of users from an immediate shutdown of the BlackBerry portable e-mail devices on Friday.
Wrapping up nearly four hours of arguments in a district court in Richmond, Va., Judge James Spencer said he would not impose an immediate injunction against BlackBerry maker Research in Motion.
But Judge Spencer said there was no escaping that RIM had been found to be infringing on NTP Inc.'s patents and he would issue a decision on an injunction "as soon as reasonably possible," according to Reuters.
"The simple truth, the reality of the jury verdict has not changed," Spencer said, adding that the parties should have settled out of court.
Most recently, on Wednesday, as part of its reexamination of NTP's patent claims, the U.S. Patent and Trademark Office issued a final rejection of one of the five patents involved in the infringement suit .
The final rejection is widely expected to lead to the Patent Office's invalidation of all of the patents at issue in the legal dispute.
Not least to notice was RIM co-CEO Jim Balsillie, who was quoted by Reuters Thursday saying that all NTP is trying to do now is "jig a timing game, because these patents will go in the garbage. The chance of them surviving is zero. Like, they're gone."
Jim Wallace, lead trial counsel for NTP, said he hadn't seen documents confirming the final rejection, but that such a move doesn't constitute the last word from the Patent Office, since NTP can appeal the ruling through the agency's appeals board, which could take another six to 12 months.
Judge Spencer has said he sees the patent reexamination as a separate process from the legal proceedings and won't wait for final word from the agency, but some experts said that now that the Patent Office appears to be speeding up the review process, it may be significant enough for him to rethink the issue.
"When a patent is in reexamination, its validity is in flux," said Gary Abelev, a partner with law firm Dorsey & Whitney.
Judge Spencer also expressed skepticism about RIM's argument that a BlackBerry shutdown would hobble critical public services and infrastructure. NTP has said it would exclude government workers from an injunction, but the Justice Department has voiced its concerns over the feasibility of a partial shutdown.
There's been a lot of legal wrangling on both sides, and the dispute has garnered widespread public attention, since a potential shutdown threatens to paralyze U.S. businesses and disrupt service for the gadget's more than 3 million users.
In a recent survey of financial services companies by Pyxis Mobile, 81 percent said BlackBerry service was critical or vital to their business, and nearly 80 percent said they were working on backup plans in case of service disruptions.
But analysts say a settlement -- which could occur at any time -- is more likely than a shutdown. A settlement would benefit both RIM and NTP, a small holding company that doesn't make its own products and stands to gain from a one-time payout.
Ben Bollin, an analyst at FTN Midwest Research, expects settlement terms to now fall below the initial $450 million agreement the two companies reached last year, but which later fell apart. That's less than half the $1 billion payment he was predicting earlier this year.
"I think RIM is realizing it has an upper hand. Basically they're just pushing a settlement out to the last possible minute. They realize they have leverage, they want a settlement to be on their terms," said Bollin.
RIM said Thursday that the settlement they were originally offered by NTP would not have allowed them to continue operations, according to Reuters.
"When they took their final position on here's what we'll do it wasn't about money, they wouldn't give us terms that would allow us to carry on our business," Reuters quoted Balsillie, the co-CEO, telling an RBC Capital Markets communications, media and technology conference. "We took it to an outside licensing counsel and they said we'd be crazy to take these terms."
NTP countered that it has offered a license that protects RIM's customers, carriers, and partners.
"NTP put this in its January 17, 2006 public court filings so that everyone can see for themselves how it protects everyone," Reuters reported NTP attorney Kevin Anderson saying in a statement. "NTP just wants global peace between the parties."
RIM may also be using its backup software plan as a negotiating tool in the settlement process. The so-called workaround plan lowers the risk of a shutdown in the event of an injunction, analysts say. But even RIM has conceded in legal briefs that any disruptions would "cause concern to users and service providers" and hurt its business.
In a research note issued Wednesday, Canaccord Adams analysts said a settlement remains more likely than not and would be a positive outcome for RIM.
The outlook of an injunction is low, but there is "a high probability of a settlement in light of the expectations that Judge Spencer will take time to deliberate," the note said.
How much time Judge Spencer will take to make his decision remains unclear, but the case has already dragged on for nearly five years in a jurisdiction that likes to decide cases quickly, according to Yoches.
Furthermore, the Supreme Court is hearing a case about when it's appropriate to grant an injunction against a patent infringer.
The outcome of MercExchange v. eBay, which could come this summer, could frame the decision Judge Spencer makes. "It's not unheard of for judges to table an issue until they receive direction from the Supreme Court," Yoches said.
Click here for the latest tech headlines.