Score one for the little guy. RIM the maker of the Blackberry caved in its patent dispute — even though things were going its way at the patent office.
Research In Motion Ltd., the maker of the BlackBerry e-mail device, Friday announced it has settled its long-running patent dispute with a small Virginia-based firm, averting a possible court-ordered shutdown of the BlackBerry system. RIM has paid NTP $612.5 million in a "full and final settlement of all claims," the companies said..The settlement ends a period of anxiety for BlackBerry users. At a hearing last week, NTP had asked a federal court in Richmond, Va., for an injunction blocking the continued use of key technologies underpinning BlackBerry’s wireless e-mail service. RIM, which is based in Waterloo, Ontario, had put away $450 million in escrow for a settlement. It will record the additional $162.5 million in its fourth-quarter results, it said.
So was NTP just a patent troll. Perhaps. There’s no question that the patent system should be fundamentally reformed, or even straight-out abolished for software.
And there are plenty of straight trolls out there who buy up old patents, or worse create nebulous ones and never ever make an attempt to make a business out of them other than suing companies who do succeed. The worst example was Jerome Lemelson who basically gouged US businesses for billions of dollars by patenting ideas he never intended to make into actual products, and then used legal subterfuge to hide the patents until someone else did actually invent the device/technology in question and then forced them to pay him off. This essentially went on till after his death in 1997, when in 2004 the courts ruled against patents he’d created in the 1950s as being valid for products invented in the 1990s. But equally worthless patent cases happen with the big guys fighting over licensing revenue, such as the long running case between Intel and TI over the integrated circuit when it was clearly a case of two independent inventors having the same idea at the same time. Although they finally settled it by cross-licensing the technology.
But there are a couple of differences here.
The first is the this was a real David v Goliath situation in which David (NTP’s late founder Tom Campana) actually did invent a product to go with his patent, and tried (but failed) to make a commercial go of it — being screwed over by AT&T in the process. In this case it seems that RIM didn’t actually filch anything from him but, unlike Lemelson, Campana did create his version of the product and tried but failed to market it successfully. He had a real company and bad luck/business judgment kept him from being there first successfully. Only after that did he create NTP. And it was only after RIM emerged using what he thought was his technology that he tried to get some real money from his invention, as the rest of his life fell to pieces including an eventually terminal illness. RIM’s predecessor product to the Blackberry was a direct competitor to the SkyTel service that AT&T went with after junking its putative deal with Campana’s company. So even while the technology may not have been identical, the business and the solution that they were aiming at — wireless messaging over paging networks — was clearly visible.
NTP wrote to RIM which did have the opportunity to buy it off cheaply in the early days, an just blew it off. But that wasn’t the real problem with the RIM case. For a start they were happy to use a patent they’d acquired to go after a competitor and keep their monopoly status. So calling NTP a patent troll just because RIM succeeded and Campana’s business failed is a little pot and kettle. Secondly, when NTP came after them seriously, RIM dragged this out in the courts while they hoped that the patents would be disallowed (as they steadily are being, in part to their political influence in DC) again not taking the sensible business decision of settling for a smaller sum. But their real error was that they cheated in court and were busted. (The link is to a long and excellent article summarizing the whole case).
RIM’s case hinged on proving that Mr. Campana’s patents were not valid because other people had already invented wireless e-mail by the time he applied for his patents in 1991. One of RIM’s key witnesses was David Keeney, whose company TeckNow had mastered an e-mail process called System for Automated Messages, or SAM, in 1987. To prove his point, RIM’s lawyers had Mr. Keeney perform a dramatic demonstration for the jury. Using two old laptop computers and a pager, he explained how he could send a text message using SAM. Then he typed "Tommy, the deal is closed" which quickly appeared on the pager. The demonstration was crucial for RIM because it proved that Mr. Keeney’s work had predated Mr. Campana’s by at least four years and it made his 1991 patents invalid.
The only problem was that to get the demonstration to work, TeckNow and RIM had secretly swapped in newer software. NTP’s lawyer spotted the discrepancy and cornered Mr. Keeney and RIM officials during cross-examination. After a few more minutes of struggling to explain how the newer version was installed, Judge Spencer cut Mr. Keeney off and told the jury to leave the room. "I’ll count to 10. I don’t want to yell at you," the judge said, admonishing RIM’s legal team for the deception.
So after that the threats of shutdown and failed settlements got bigger and bigger and started to really threaten RIM’s business, as competitors like Microsoft and Palm jockey to get into the “wireless push email” space. Until today, when apparently the case is really over. A huge business error by RIM has cost them $612.5m plus a whole bunch more. But having said that, and even though his team was damn stupid to try to cheat in court, what RIM’s CEO Mike Lazaridis said is true.
"There’s a tremendous amount of innovation and hard work that goes into taking an idea and realizing it and then making it into a product," Mr. Lazaridis says defiantly. "There are 16 million lines of code in BlackBerry. Sixteen million. It’s hard to imagine 16 million lines of code. They all have to work in harmony and perfection to make this thing do its job. Are you trying to tell me that one little concept is more important than another little concept, and that it didn’t take man-years and man-years of effort to make all that stuff work?"
So eventually the patent system needs reform or abolition. And of course one industry that means a great deal to is biotech and pharma, where similar patent wars are waged everyday. But until then some common sense is still required.