Canadian Government and Microsoft Supports Research In Motion Patent Appeal

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The Canadian government is backing Research In Motion Ltd.’s attempt to persuade a U.S. court to review a finding that the BlackBerry e-mail pager infringes a Virginia company’s patents. A three-judge panel of the U.S. Court of Appeals for the Federal Circuit in Washington, in rulings in December and August, agreed that Research In Motion infringed patents owned by closely held NTP Inc. Research In Motion now wants the entire 12-member court to look at the case.

Canada’s government says a company can’t infringe a U.S. patent if the system accused of the violation is outside the country. Research In Motion’s network control center, which routes all e-mails sent through BlackBerry devices, is at the company’s headquarters in Waterloo, Ontario.

“This is not a case, as NTP sought to characterize it, about a company attempting to evade U.S. patent law or to exploit loopholes by locating some minor part of its operation outside the United States,” Research In Motion said in papers filed with the court Aug. 16. “RIM is a Canadian company.”

Research In Motion is trying to overturn a November 2002 jury verdict that awarded NTP $23 million plus royalties and resulted in an order that Research In Motion alter the BlackBerry system or take it off the market. Research In Motion in March agreed to pay $450 million to end the case. The accord fell apart because of a dispute with NTP over licensing terms.

Canada has given C$34 million ($29 million) in assistance to Research In Motion, the government said. The company reported net income of $132.5 million on sales of $453.9 million in the quarter ended May 28.


“If NTP wins, they will go after everyone under the sun,” Pablo Perez-Fernandez, a ThinkEquity Partners analyst, said today. “It’s in a lot of people’s interest to have RIM win.” He rates the company’s shares “sell” and doesn’t own them.

NTP will submit its response tomorrow, said the company’s attorney, James Wallace. Canada owns a stake in Research In Motion, so isn’t a disinterested party, he said.

Research In Motion shares fell 64 cents, or 0.8 percent, to $76.85 today in Nasdaq Stock Market trading. They have fallen 6.8 percent this year.

The Federal Circuit, which specializes in patent law, ruled Aug. 2 that the method, or process, of operating the BlackBerry pager system doesn’t infringe the NTP patents because it’s in Canada. The system and devices do infringe, because control and “beneficial use” are inside the U.S.

The Canadian government, in papers filed Aug. 19, said the opinion “lacks any acknowledgement or discussion of the effect of, or the effect upon, long-established international understandings and agreements regarding national jurisdiction over intellectual property.”

The Canadian Chamber of Commerce; Intel Corp., the world’s largest computer-chip maker; and Seven Networks Inc., a Redwood City, California-based maker of software that powers e-mail for customers of cell-phone companies like Cingular Wireless LLC, also filed papers on Aug. 26 supporting Research In Motion.

Microsoft Support

Microsoft Corp., the world’s biggest software maker, also wants the full appeals court to hear Research In Motion’s case. Microsoft, based in Redmond, Washington, has been in a dispute with AT&T Corp. over ways to improve voice transmission over the Internet.

The appeals court on July 13 said Microsoft could infringe an AT&T patent in copies of the Windows operating system sent abroad from the U.S. Microsoft said the decision was “incompatible” with the findings in the Research in Motion suit. The company wants the court to resolve the two opinions.

Research In Motion, in its petition for a review, also says the three-judge panel erred when upholding the trial judge’s interpretation of several terms in the patent. The company is relying on a July decision by the full appeals court that warned judges against relying on dictionaries to define patent terms.

The cases are NTP Inc. v. Research in Motion Ltd., 03-1615, U.S. Court of Appeals for the Federal Circuit, and NTP Inc. v. Research In Motion, 01-767, U.S. District Court for the Eastern District of Virginia.

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