Half-page deal torn apart in BlackBerry patent dispute

Shares in the maker of the popular wireless handheld computers tumbled on Thursday after RIM announced that it had taken court action to force NTP to carry out the terms of the agreement reached between the two firms this year.

The dispute dates back to November 2001, when NTP alleged that certain RIM products were infringing on patents covering a method of using radio frequency wireless communications in e-mail systems.

In November 2002, a jury found in favour of NTP and the firm was awarded damages of $53.7 million together with an injunction, prohibiting RIM from selling in the US the BlackBerry and any other products, software or services using the wireless technology in dispute. The judge stayed the injunction pending an appeal.

The Court of Appeals issued its ruling in December last year, finding that RIM’s Blackberry did indeed infringe on some of NTP’s patents, but that one of the lower court’s key definitions, relating to the term “originating processor", was too wide. The Court of Appeals therefore returned the case to the District Court for further arguments over five claims that may have been affected by the flawed definition.

With both firms under pressure from the ruling, they settled the case in March. RIM promised to pay $450 million to NTP in return for an unfettered right to continue its BlackBerry-related wireless business without further interference from NTP or its patents.

The agreement, known as the “Term Sheet,” was only half a page long, and stated that the two firms would continue to negotiate in good faith to finalise the terms of a definitive licence and settlement agreement.

However, according to RIM, NTP is now refusing to honour its obligations to finalise the definitive agreement. RIM has therefore filed suit, asking the Court to enforce the Term Sheet.

Reuters reports that NTP has filed a counter-motion, arguing that it has become clear that the Term Sheet does not represent a meeting of minds. The two firms appear to be in dispute about the scope of the agreement as set out in the Term Sheet.

According to the New York Times, NTP does not believe that the agreement relates to technology developed by RIM since the first lawsuit filing, and is seeking additional payments in connection with this.

According to a report on GlobeandMail.com, the deal-breaker is the question of licensing or sublicensing the patents to third parties.

Earlier this year the US Patent and Trademark Office ruled that the validity of two of the five NTP patents invoked by the case was questionable. It has yet to issue a ruling on the remaining three.