It's a great time to be a patent attorney. Just ask Research In Motion (Nasdaq: RIMM), which had to pay out $612 million in a time-consuming patent battle with NTP -- a company that hires attorneys to litigate patents.
RIM, on the other hand, develops and distributes real and very useful products. Its flagship Blackberry is a "must have" for many professionals. (I've edited many Fool articles on mine.)
Just when it looked like RIM was clear of major patent litigation, the company has now been hit with another lawsuit. The new plaintiff, Visto, claims that RIM is violating four of its patents. As a result, it wants unspecified damages and an injunction in the U.S.
Visto is also suing Motley Fool Inside Value pick Microsoft (Nasdaq: MSFT) and Good Technology. Interestingly enough, this may be good news for RIM. If Visto prevails or gets a settlement, the damages it demands could be spread over a larger base of plaintiffs.
Still, litigation is always expensive and takes a toll on management. Moreover, in the NTP case, RIM experienced some customer delay and defection over fears that the Blackberry network could have been shut down.
However, RIM does have some leverage in the Visto case. It will take at least a year to get to trial, and in the meantime, RIM will use its legal resources to try to invalidate the Visto patents. Moreover, RIM may sue Visto for infringing on its own extensive portfolio of patents. NTP had no products, but Visto has its own software, and its customers include such large firms as Cingular. A lawsuit from RIM might scare some of these customers -- a good hardball tactic. Given the company's brinkmanship with NTP, RIM is likely to fight hard.
The Visto case is not likely to be much of a drag for RIM, at least for the next year or so. If anything, the case highlights highly successful tech products' tendency to become the targets of litigation.
Fool contributor Tom Taulli does not own shares mentioned in this article.
Terms & Conditions
RSS Headlines
Fool UK