RIM vs. NTP - a few observations

There has been a lot of press about the RIM lawsuit this week. Most of the press is accurate when it comes to past events, and the current situation. Much of the coverage is painting the future with fear, uncertainty and doubt. Welcome to the No FUD Zone. I was going to steal the No Spin Zone label, but the fact of the matter is, no one can accurately forecast the future. Any attempt to prognosticate the future of this law suit is going to entail some level of spin. With that said, here is my spin on the situation, with a heaping dose of support for my contentions.

1) BlackBerry service will not shut down. I firmly believe this for MANY reasons

a) The Federal Government will not allow any action to take place that threatens their daily communications.

i) The Justice Department has filed a “statement of interest” which recommends that the injunction shouldn’t be enforced because doing so will harm the federal government. "This is nearly unprecedented," says professor Mark A. Lemley, director of Stanford's Program in Law Science and Technology. "I can't think of another case in which they have weighed in unsolicited on whether a court should grant a particular injunction.” Actually, there are at least three other recent cases where the Justice Department filed these statements of interest with the courts. In two cases, judges denied plaintiffs' calls for injunctions and gave the feds all they asked for. (No ruling in the third case, yet.)
ii) NTP has promised that government employees would not be shut off. While NTP claims that the wireless carriers can tell the difference between government users and non-government users, the Justice Department says the only viable way to differentiate is to create a huge “white list” of permitted users. I can’t imagine certain government agencies (CIA, NSA, FBI, White House, etc.) giving a list of their employees and their respective phone accounts to the carriers for ANY reason.

b) Shutting down the service would be a damaging blow to RIM’s sales, and thus, a damaging blow to the potential royalty revenue of NTP.

c) RIM will settle before it shuts down its service, and stops selling the device. This is purely a wishful, but educated, desire on my part. Note: the injunction would not only turn off the RIM service, but would also put a halt to BlackBerry sales. While the press focuses on the shutting down of the service, sales would be directly impacted by the injunction as well. Just another reason to make sure the service stays alive.

2) RIM is working on a work-around. Should an injunction be placed on the BlackBerry service, this work-around is supposed to maintain a comparable level of service without infringing on the patents in question. RIM has not revealed any detail regarding the work-around. One blogger believes that he knows the solution that RIM is testing (StealthBerry). Caution, the StealthBerry link points at a blog. It is not a RIM document, it is not necessarily fact, it is just another person’s perceptions and opinion.

3) The parties are moving closer together despite the war of words.

a) NTP, in a recent court filing, said it would support a 30 day grace period between the announcement of the injunction, and the enforcement of it. NTP claims this is to give customers time to migrate to other solutions. Since NTP has royalty agreements with some of RIM’s competitors, this may be a savvy move. One catch to this theory is that one of RIM’s biggest competitors, Microsoft, does not have a royalty agreement with NTP. If customers flee RIM, and run into the arms of Microsoft, there is no guarantee that the migrated customer will ever generate revenue for NTP. At the same time, it gives RIM an additional 30 days after the ruling to settle with NTP before being shut off.

b) The District Judge in the case had ruled that RIM would have to pay royalties of 8.55% to NTP. NTP, in a recent filing with the court, said it would accept a 5.7% royalty settlement.

NOTE: This is just my opinion. It does not reflect the views of RIM, my employer or any other organization. It is just my opinion, based on some heavy reading, my exposure to RIM for over 4 years, and my 9 years of wireless data experience.

RIM’s spin can be found at http://www.rim.com/news/press/2006/pr-23_01_2006-02.shtml.