Friday, March 03, 2006

Why A Deal Was Reached

Analysts say the main reason for the agreement appears to be the judge’s impatience and unwillingness to wait for the US Patent Office to rule on the NTP patents. This combined with the beginnings of a slowdown in BlackBerry sales, as customers feared it would be disruptive or impossible to work around an injunction force RIM to make the agreement. NTP in turned agreed because $612.5 million is a lot of money.

Since the US Patent Office’s re-examination of the patents is unaffected by the deal, RIM may be paying for patents that will soon turn out to be invalid. As a result RIM co-CEO Jim Balsille feels that he “took one for the team” by agreeing to license patents that he feels “will not survive” but with RIM stock rising by 18.5% in after hours trading following the announcement he must be feeling better to some extent.

NTP Wins: RIM Strikes Deal for $612.5 million

RIM and NTP have announced that RIM will license NTP’s patents for a one-time payment of $612.5 million, regardless of what happens to the patents. Among the terms was the ability for RIM to ensure its third party partners could use the patents. This was something that NTP claimed previously suggested terms would but RIM stated they did not. The press release states:

The license covers all the current NTP patents involved in the litigation as well as any future NTP patents. All of RIM's past and future products, services and technologies will be covered as well as all RIM customers and providers of RIM products and services, including wireless carriers, distributors, suppliers and ISV partners. RIM will have the right to grant sublicenses under the NTP patents to anyone for products or services that interface, interact or combine with RIM's products, services or infrastructure. The agreement permits RIM and its partners to sell its products, services and infrastructure completely free and clear of any claim by NTP, including any claims that NTP may have against wireless carriers, ISV partners or against third party products that use RIM's BlackBerry Connect / BlackBerry Built-In technology.

RIM’s executives continue to belief that the patents will be struck down by the U.S. Patent and Trademark Office but the agreement with NTP does not call for a refund if this happens. However there maybe other companies not yet sued by NTP that can benefit if the patents are struck down.

Wednesday, March 01, 2006

Customer Reaction and Plans

The Washington Post looks at customer reaction to a possible BlackBerry email service injunction in the U.S. and preventive steps that companies are taking or plan to take.

RIM’s competitors are not overlooking this opportunity. The article states:

RIM's problems have been good for competitors' business, including Good and Visto Corp., both of which have received hundreds of inquiries from companies looking for alternatives, and both of which have licensing agreements with NTP.

However most customers are continuing to use BlackBerry devices due to the time and cost of switching devices.