THE WAR IS OVER: NTP and RIM Settle.

After years of high-profile legal battles, NTP and Research-in-Motion (RIM) have reportedly settled their patent dispute over RIM’s BlackBerry system. According to the press release:

RIM has paid NTP $612.5 million in full and final settlement of all claims against RIM, as well as for a perpetual, fully-paid up license going forward. This amount includes money already escrowed by RIM to date.

The settlement, widely expected for the past year, will likely bring to a close the wild ride at NASDAQ. (RIMM).

An appropriate reader comment:

Actually, I’m rather sorry to see this settlement. All the media hype and nonsense, plus the fears of politicians of losing their service, seemed to be greatly contributing to patent reform momentum and to the Supreme Court taking more patent cases.

But at least the belated but initially effective RIM reexaminations of the patents in suit served to publicly demonstrate reexamination effectiveness in lowering settlement expectations. And without all the lawsuit publicity the reportedly cited obscure prior art Norwegian university publications would probably never have surfaced.

On the Reexaminations: A settlement could include a provision that NTP must return RIM's money if the patents were eventually invalidated. However, considering NTP's stance thus far, such a provision would be exceedingly unlikely. Consequently, I expect that the continuing reexamination of NTP's patents at the PTO will become more of a curiosity than a business concern. The only way that NTP can stop the reexamination process would be to capitulate to the PTO and thus abandon the patents.

 

Comments

[Ronald J Riley]

I was reported that NTP does not have to return the money. My understanding is that the $450 million deal last year fell apart because that was what RIM was insisting on.

RIM's self inflicted problems are far from being over.

The only problem is that RIM started another war last June, it seems to me that people deserve to know about this.

American inventor of predictive text Howard Gutowitz, who owns a small company named Eatoni Ergonomics, tried to license his inventions to RIM. RIM responded with a lawsuit. This is a common tactic of deep pocketed companies, which often is a ploy to bankrupt financially weaker inventors. Our organization, PIAUSA.org has helped this inventor make contact with those who are in a position to stay the course until justice is achieved. http://www.eatoni.com/wiki/index.php/Litigation

It is our opinion that RIM's litigation with Howard Gutowitz may well become as contentious and self destructive as their battle with NTP. How will investors and end users react when they discover that RIM is facing a very similar situation to the NTP case? What businesses will deploy RIM services when they have legitimately licensed alternatives such as Visto and Good Technology and the Palm Treo? Why isn't our government switching to reputable service providers who respect American innovator's intellectual property? And perhaps the most important question is why some of our representatives are backing patent pirates!

Many years ago I observed that some CEO's act like teenage boys, big egos - little thought before engaging those egos - short term gain orientation and marginally developed sense of ethics. RIM's conduct most certainly reinforces this observation.

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The Professional Inventors Alliance USA was created more than a decade ago to protect American invention and encourage innovation. American inventors saw a need to track congressional legislation and federal policy that impacts independent inventors, small and medium-sized businesses and colleges and universities. The Alliance is the premiere organization in the nation, providing independent inventors a united voice in order to improve public policy.

The Alliance provides legislative counsel, congressional updates and strategy development to its members through a number of vehicles. Additionally, through its speaker’s bureau, Alliance members have an opportunity to provide expert opinion to many of the nation’s top-tier business, technology and mainstream media organizations. Over the years its members have testified before Congress, offered counsel to key Senate and House committee members, and successfully pushed legislation to protect America’s independent inventors.

Since its inception, the organization has grown into one of the most vocal advocates for America’s patent system

Ronald J Riley, President
Professional Inventors Alliance
www.PIAUSA.org
RJR (at) PIAUSA.org
Change "at" to @
RJR Direct # (202) 318-1595

[R. Sanderson]

Mr. Riley's comment is a reflection of the problem with the patent system in this country. It's sad that people believe they are entitled to hundreds of millions (even billions) of dollars sweepstakes via the patent process. It takes years, large amounts of investment and massive effort to pioneer any new business, let alone an entirely new market. It is incredibly difficult to commercialize technological ideas and build the business and distribution infrastructure required. Those few companies that enjoy the success of RIM create enormous value for its customers, employees and partners.

This is very clearly an era of innovation happening at unprecedented pace on a global basis. Patent office officials admidt the process is becoming ineffective as they are overwhelmed by the volumes of filings and diversity of technological innovation. Most of these innovators are working completely independent and unaware of one another. However, many feel cheated when another commercializes a product falling generally within a concept they claim to have invented like "wireless email" or "predictive text". They believe they are entitled to share in the success of those who ultimately persevere. The system is creating massive overhead and a huge tax on real innovation and value creation.

I suppose Mr. Riley is also dismissive of the final actions of the PTO that rejected the validilty of all NTP patents in this case? On one hand the patent office is credible and qualified to grant intellectual property rights. But on the other hand a reexamination initiated by the PTO director is meaningless?

It's unfortunate that obscene abusers like NTP and sentiment such as that expressed by Mr. Riley has gotten to the point where patent reform is becoming a topic of national importance. Regulatory policy is never perfect as it attempts to best serve many conflicting interests. Once a motion of change is initiated, it often swings too far in the other direction. This may compromise the interests of the constituents Mr. Riley's organization is claiming to protect - indeed the "small guy" may be hurt should such cries for reform manifest.

If they really want to serve and protect legitimate inventors, organizations like the PIAUSA should spend far less effort fighting the so-called "deep pocketed", evil corporations and much more effort exposing and discrediting abusers of the system.

[Joe Smith]

One of the ironies of the RIM NTP settlement is that RIM now has a vested interest in seeing NTP win the patent re-examinations and have the patents validated. As the holder of a pre-paid licence RIM will want its competitors to be forced to paying licencing fees to NTP. Cancellation of the patents will leave RIM's competitors free to use the technology for free.

I disagree strongly with Mr. Riley's comment. I hope that the US Congress acts soon to free the US economy from the destructive burden of patent trolls.

[Joe Smith]

So I went and did a little checking on mr. Riley's claim. It seems that his comment here is a standard form posting he is using. See for example: http://www.computerworld.com/blogs/node/1916

I have not checked into the contents of Mr. Gutowitz's patents although it appears that they target cell phone type numberic keypads and not QWERTY keyboards such as most BlackBerry models have.

Mr. Gutowitz apparently had his inventive idea in 1998, long after Microsoft introduced auto-completion in Word in 1993.

[Jay Wahlquist]

I don't agree entirely with either the statements from Riley or from those opposed to him. I think it is unfair to automatically assume that "deep pocketed" companies are playing dirty as Mr. Riley apparently has. However, it is also not correct to automatically assume that Mr. Gutowitz does not have a case against RIM. So what if his invention came 5 years after Microsoft introduced auto-completion. If it got through the patent office there is a presumption of validity. It might very well be invalidated, but the fact that he has the patent means he may very well have invented something for which RIM should have to pay him. In particular I find these following comments particularly disturbing:

"It takes years, large amounts of investment and massive effort to pioneer any new business, let alone an entirely new market. It is incredibly difficult to commercialize technological ideas and build the business and distribution infrastructure required. Those few companies that enjoy the success of RIM create enormous value for its customers, employees and partners. . . .

However, many feel cheated when another commercializes a product falling generally within a concept they claim to have invented like "wireless email" or "predictive text". They believe they are entitled to share in the success of those who ultimately persevere. The system is creating massive overhead and a huge tax on real innovation and value creation."

The reward for persevering and all that effort is not the right to use another's property freely. The reward is the millions of dollars that the company receives in revenue. Let's not forget the basic principle behind patent law found in the Consitution: "To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries."

Whoever invents something new and useful, has the exclusive right to their invention. The fact is they ARE entitled to share in the wealth if someone else is making money off of their patented invention. It doesn't matter if the holder of the patent is a multi-billion dollar company with the means of commercializing their product or a 12 year old kid.

What could be more stifiling to the progress of science (and the American dream for that matter) to adopt the idea that only those who can market a product successfully have the right to exert their patent rights or to obtain a patent?

I recognize that their are a lot of people who are attempting to exert rights that they don't have (because the accused infringer is not in reality infringing their patent.) However, we can not jump to that conclusion just because an independent inventor is asserting what he believes to be his right against a successful company. Reform is needed, but not that kind of reform.

[Alun]

As much as I hate to agree with Mr Riley, I do on this occasion. Labelling inventors who fail to work their inventions (or a successor corporation to the late inventor, as in this case) as 'patent trolls' is merely a lame attempt to justify wilful infringement by large corporations in general.

OTOH, the most obvious way to avoid such battles by legislation would be to adopt 'licences of right' for non-working, as exist in other countries. Of course, RIM would still have had to pay a royalty under such a system, and their behaviour indicates they would probably still have dragged it through the courts, but other, more reasonable, prospective infringers would likely not.

Of course, I expect to be flamed by Mr Riley even for proposing licences of right!

Alun Palmer, US Patent Agent

[Gideon Gimlan]

Defending a patent on re-exam places the patent owner in a funny position because he/she is asking the Patent Office to admit they have made two blunders in a row. The first blunder is that of declaring that a susbstantial new question of patentability exists and the second blunder is that of persisting with the rejections even if based on flimsy evidence. So the PTO has its "reputation" at stake when it persists with final rejections. Retraction is often not seen as an option by PTO management.

A quick look at NTP's re-exam records (which are open to the public via Public PAIR) shows that each Office action is roughly 70 pages long. There is a lengthy string of mini-battles inside the OA, they are fighting it out claim by claim. NTP merely needs to have one claim survive in each patent in order to keep the "patent". Just because the PTO says it's final does not mean it's final. NTP still has a right to get it's evidence on record before shifting into appeal mode. The appeal could take years.

[Jim L.]

It's sad to see that RIM caved in at the last minute. Now it'll join a long list of other tech firms regarded as weak, and will be shaken down by patent trolls periodically till its death.

I think it'd be a great Ph.D. thesis topic to study the quantitative economic effect of current US patent policy. There are many variables at play: incentives for R&D from limited monopoly, disincentives from legal extortions, tax revenues derived from the legal system, advantages enjoyed by countries with weak patent rights, policy responses by US to level the playing field, and so on. It'd be a great read.

The whole topic of patent protection has been debated countless times. What's missing from the debate, however, is some *quantitative* data to determine what's the *optimal* level patent rights. One can't shake the feeling that US has left that task to its Court system. But legal instruments are too blunt, react too slowly, and US could be risking permanent damage to its innovation engine...

[Joe Smith]

Mr. Wahlquist quotes the constitution "To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries."
Surely then patent law must be limited by the constitution to granting exclusive rights for such period of time, if any, as can be demonstrated to promote the progress of science and useful arts." If the patent scheme, or some element of it, does not serve to promote science or the useful arts it is unconstitutional. It is difficult to see how the NTP patents served to promote anything useful - RIM never relied on the NTP inventions, but rather invented its methods independently.

Mr Gimlan comments that NTP needs to save only one claim in each patent for the patents to be valid. I assume that what would happen in that case would be that the claims found to be valid would survive but the individual claims which were found to be invalid would be cancelled.

In the case of the RIM/NTP litigation RIM was only found (after the appeal) to be infringing nine out of hundreds of claims so the validity of most of the NTP claims was completely irrelevant to RIM.

[Ronald J Riley]

RIM has a massive public relations and lobbying effort but the fact remains that they were caught red handed committing fraud on the court. In light of RIM's conduct I see no reason to believe their claim that they independently invented. It is a fact that RIM has licensed other inventions and based on that fact it is reasonable to presume that RIM did do a due diligence search.

Also, in light of RIM's general conduct, and the fact that they were caught in the unethical act of committing fraud on the court, it would be reasonable to question their ethics in regards to other aspects of their business.

I deal with many patent attorneys including those who work for well heeled patent pirates. The story I have heard is that a patent pirate sorts the patents they are likely infringing into two stacks. One stack consists of patents owned by nine-hundred pound guerrillas and the company actively seeks to license those patents. The other stack is comprised of patents held by junior parties. Those are the patents which the patent pirate learns from and tries to convert to their own use. Those are the patents deemed to be reasonably safe to infringe.

Now lets take a look at a real honest to goodness American inventor named Thomas Campana. He is older, and had a business fail when AT&T decided to not partner with him. He was in poor health. I can visualize how some sharpie in RIM reasoned that Campana probably would not notice and if he did they could easily dispatch him. After all, his resources were limited.

So RIM raped Campana and when it turned out that he still had some fangs they found themselves in an epic patent battle. And the rest is history, in that RIM's rather poor management managed to turn a case which may have cost a few million into a $612 million blunder. Yep, the folks running RIM have made their place in history.

Ronald J Riley, President
Professional Inventors Alliance
www.PIAUSA.org
RJR (at) PIAUSA.org
Change "at" to @
RJR Direct # (202) 318-1595

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[Just an ordinary inventor(TM)]

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[law of attraction]

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