Judge Delays Blackberrry Cutoff Decision

By Peter Kaplan and John Crawley

A U.S. judge on Friday stopped short of ordering the shutdown of millions of BlackBerry devices but made blunt observations about the case that could nudge manufacturer Research In Motion Ltd. and patent holder NTP Inc. toward settlement.

U.S. District Judge James Spencer reminded RIM that a jury had already found it to be infringing NTP's patents and said the parties should have settled out of court.

"The simple truth, the reality of the jury verdict has not changed," Spencer said after nearly four hours of a hearing on whether to grant NTP an injunction halting BlackBerry service.

"This case should have been settled but it hasn't, so I have to deal with that reality," said Spencer. "I'm surprised you have left this decision to the court."

Spencer said he would issue a decision on an injunction "as soon as reasonably possible" but gave no indication of when.

The delay sent RIM shares soaring, but the judge expressed skepticism about RIM's argument that a shutdown of the portable e-mail devices would hobble critical public services.

Spencer noted that RIM had told investors that its software work-around would avoid disruptions to its more than 3 million U.S. users.

RIM and NTP reached a tentative settlement of $450 million early last year, but the deal fell apart. The question now is whether the judge's comments may push the two sides to reach a pact.

"He certainly wants them to settle. He's giving them one more chance to do that," said Steve Maebius, a patent attorney with the firm Foley & Lardner LLP who is following the case.

Martin Glick, a patent lawyer for RIM, said the company was still in active negotiations with privately held NTP.

"Judges always try to find ways to urge the parties to reach a resolution," he told reporters outside of court.

NTP said in a statement it had tried to meet with RIM this week. "We want all BlackBerry users to know that we have repeatedly attempted to settle this issue with RIM."

RIM shares rose as much as 12.7 percent to $78.38 after Spencer's announcement but trimmed their gains to close at $74.05 on Nasdaq, up $4.52 a share or 6.5 percent for the day.

Canada-based RIM has been locked in a court battle for more than four years with NTP, which filed suit late in 2001. A jury found in favor of NTP in 2002.

Earlier on Friday, NTP asked Spencer for an injunction against U.S. BlackBerry service with a 30-day grace period for users to find alternative service and sought an immediate imposition of $126 million in damages for past infringement.

RIM countered by arguing a shutdown would be against the public interest but it also pledged outside of court to keep BlackBerry service going.

"I will tell customers that, no matter what, the BlackBerry service will keep on running," RIM co-chief executive James Balsillie told reporters. The technical workaround would take 15 to 30 minutes per BlackBerry user to implement.

A lawyer for the U.S. Justice Department asked Spencer to exempt all government employees and contractors from any shutdown and sought a

90-day grace period for all users.

Some users are so reliant on the gadgets that they have dubbed them "CrackBerries."

Among the alternatives to the BlackBerry is the Treo 650 smartphone made by computer and smartphone maker Palm Inc..

Others who could cash in on a BlackBerry blackout are Nokia, Samsung Electronics and Hewlett-Packard Co., which offer e-mail capable mobile phones.

RIM has challenged the validity of the NTP patents in an administrative proceeding at the U.S. Patent and Trademark Office but the process is lengthy and NTP could appeal any final decision against it at the patent office back to the courts.

The patent office this week issued final rejections of two of the five NTP patents at issue in the case.

RIM's Balsillie told Reuters he was "thrilled beyond thrilled" at the patent office action. RIM has been hoping that all the patents will be invalidated before Spencer issues any injunction.

Copyright 2006 Reuters Limited.

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