Friday, December 02, 2005

USPTO to Invalidate NTP Patent?

To follow up on our recent coverage of the ongoing BlackBerry litigation debacle, the USPTO has issued a non-final rejection of the patent at the core of the BlackBerry case, according to new reports (additional coverage here). The summary of a USPTO document dated Nov. 30 states, "the next office action is expected to be a final rejection of all current claims."

This is good news for RIM and BlackBerry users, and good news for innovation. It is bad news for companies like NTP, considered by many to be the worst kind of patent troll.

If the rejection is finalized, RIM is exonerated. But at a high cost: this litigation has been proceeding for more than a year now, with both sides spending large sums of money that drive up the cost of consumer products and steal earnings from stockholders. Worse, RIM is still looking at the possibility of having to pay NTP several billion dollars to make this all go away; the courts seem to have already decided to force a settlement even if the patent becomes invalid.

You may ask yourself why a company like NTP with shaky patent claims can get this far. The answer is that the system is set up to encourage this type of behavior. Patents on overly-broad, obvious, or outright invalid claims are far too easy to obtain, and the rewards for trying to extort money with these claims is far too great, while the negative consequences are almost non-existent. If it loses, NTP could walk away from this whole thing with no punishment other than a bill for its own court fees. RIM and the BlackBerry, on the other hand, have suffered marketplace uncertainty over the continuing viability of its main product line (read: potential sales loses) and corresponding setbacks in its stock price. It has also had to invest in re-implementing its network and technology to skirt the disputed patent claims.

Can RIM recover any of these loses by counter-suing NTP for damages? Unlikely -- NTP can claim good faith in its persecution of RIM; it had a patent in hand that was issued by the USPTO, stating that it was the sole owner of this idea of sending email over wireless signals.

Update: Further coverage at Peter Zura's 271 Patent Blog


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