RIM’s Official Update on NTP Litigation


he U.S. District Court for the Eastern District of Virginia issued a ruling today in the patent litigation between Research In Motion Limited and NTP, Inc. The District Court ruled that the Term Sheet entered between the parties in March 2005 to settle the litigation was not an enforceable agreement. Other details of the ruling were filed under seal by the District Court, therefore RIM cannot comment further on the details of the decision. The District Court also denied RIM’s motion to stay further proceedings in the case until the U.S. Patent & Trademark Office reaches a final determination in its reexamination of the NTP patents. As a result of today’s rulings, further proceedings will continue in the District Court.

The District Court will set up a briefing schedule and hearing date at a later time for further proceedings in the case based on the remand from the U.S. Court of Appeals for the Federal Circuit. The Federal Circuit decision of August 2, 2005 vacated the injunction and damages award originally entered as a result of the District Court trial in 2002 and remanded the case to the District Court for further proceedings. The Federal Circuit decision also reversed or vacated the infringement finding on 9 of the 16 litigated patent claims.

As previously disclosed, RIM will file a request that the U.S. Supreme Court accept an appeal of the Federal Circuit’s August 2, 2005 decision in relation to its affirmation of infringement on 7 litigated patent claims. The process by which the Supreme Court will decide whether to hear the case is expected to occur over the next few months. While further review by the Supreme Court is generally uncommon, RIM continues to believe this case raises significant national and international issues warranting further appellate review.

During the upcoming proceedings, the District Court will be asked to decide a variety of matters relating to the litigation, including the impact of the Federal Circuit’s reversal of infringement findings on issues of liability and damages. RIM also expects NTP to ask the District Court to enter a new injunction prohibiting RIM from providing BlackBerry service and from using, selling, manufacturing or importing its handhelds and software in the United States. The District Court will schedule briefings and a hearing prior to deciding each of these matters. RIM maintains that an injunction is inappropriate given the specific facts of this case, including:

* the outright rejection of all NTP patent claims in rigorous initial Office Actions* already issued by the Patent Office;
* the fact that the Patent Office is expected to begin issuing its next Office Actions (which will take into account NTP’s responses to the initial Office Actions) in the coming weeks;
* RIM’s upcoming request for Supreme Court review;
* the Supreme Court’s November 28 decision to hear the appeal in the case of MercExchange v. eBay on questions relating to the propriety of injunctions in patent litigation; and
* public interest concerns relating to any potential suspension or interruption of BlackBerry service in the United States.

RIM believes these factors should hold significant weight in any decisions relating to an injunction, however it will ultimately be up to the courts to decide these matters and there can never be an assurance of a favorable outcome in any litigation.

As a contingency, RIM has also been preparing software workaround designs which it intends to implement if necessary to maintain the operation of BlackBerry services in the United States. Further details will be made available if such implementation becomes necessary.

RIM is reviewing any potential accounting implications of the latest developments and will provide a further update as soon as practicable.

* The rejections of NTP patents in the initial Office Actions issued by the Patent Office were based in part on prior art not considered in the District Court trial in 2002 and were derived through a recently improved Patent Office process whereby reexamination decisions now require thorough review and unanimous agreement from a panel of supervisors and senior patent examiners (see press release titled “USPTO IMPROVES PROCESS FOR REVIEWING PATENTS” at http://www.uspto.gov/web/offices/com/speeches/05-38.htm).

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