Research in Inaction

Research in Motion, ticker symbol RIM, and the maker of the famous Blackberry, may face a shutdown following a Supreme Court ruling denying cert to review a patent infringement suit lodged against the company by NPT.

The legal issue confronting RIM goes back five years. In 2001, NTP, a patent holding company, filed a suit against RIM claiming that the BlackBerry infringed on its patents. A jury found in favor of NTP and awarded the company damages. Last year, RIM and NTP reached a tentative $450 million settlement, but the deal fell apart.

NTP is scheduled to file a request for an injunction on Feb. 1, although the judge who will rule on that request has not set a timetable on when to expect that decision.

The Supreme Court's decision to not review the case doesn't bode well for RIM, according to Ken Weitzman, a partner at legal firm Chadbourne and Parke in New York. "There will likely be an injunction. The question is what is the scope of the injunction," Weitzman said.

The court has discretion. In a worst-case scenario, an injunction could force RIM to shut down the BlackBerry system, potentially affecting most of RIM's approximately 4.3 million U.S. subscriber accounts. NTP has said an injunction would not affect BlackBerry products used by U.S. federal, state, or local governments.

This is a high stakes game, with hundreds of millions of dollars at stake. A settlement is quite possible, with the terms likely to be in the $700 million range. Expect a sigh of relief from Blackberry users when this situation is resolved.