So much for the notion of paying someone to make them go away. After Research In Motion (NASDAQ:RIMM) settled with wireless email patent holder NTP for $612.5 million in March 2006, most people would have thought that would be the last they heard of the small private company. But the lawyers are back from their vacation and going after even deeper pockets.
In a recent federal court filing, NTP now wants to take on the four main U.S. wireless carriers -- AT&T (NYSE:T); Verizon Wireless, which is a joint venture between Verizon Communications (NYSE:VZ) and Vodafone; Sprint Nextel (NYSE:S); and Deutsche Telekom's T-Mobile USA -- for allegedly violating eight of its patents. Even though RIM's BlackBerry devices are exempt from the suit, carriers typically offer other wireless email services on handsets from Nokia (NYSE:NOK) and Motorola (NYSE:MOT). NTP is now claiming that it should earn a fee from these services as well.
While the carriers have yet to comment on the lawsuit, investors should expect a long and protracted fight. The carriers will likely drag out the litigation as long as possible while attempting to invalidate NTP's patents. RIM already got most of the way there, persuading the U.S. Patent and Trademark Office (USPTO) to invalidate NTP's patents (on a preliminary basis) at the center of its lawsuit before settling. Since NTP appealed the patent invalidation, the patents were still enforceable in the courts pending a final decision from the USPTO.
The highly contested Patent Reform Act -- recently approved by the House and now making its way through the Senate -- contains provisions that seek to weed out "obvious" inventions that are not worthy of a patent. Also, several precedent-setting lawsuits may make it much more difficult for NTP to make this lawsuit stick. The Supreme Court's decision in 2006 in eBay (NASDAQ:EBAY) v. MercExchange makes it harder for patent holders to win injunctive relief -- the award that forces the infringing party to stop selling the disputed invention.
With the trend in patent reform and recent decisions placing more scrutiny on patent quality and litigation, NTP's patents may not survive long enough to see another fat check from wireless service providers.
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