RIM Paid $450 Million For Patents That Aren't Valid

from the whooops dept

It was surprising last month that RIM finally gave in to patent hoarder NTP and agreed to pay $450 million to license their portfolio of patents on fairly obvious concepts. This came just a few weeks after NTP paid RIM-competitor Good Technologies to license the same patents. However, while we missed this story last week, Politech notes that the patent office rejected one of the main patents, and has indicated that it’s likely to throw out the rest as well. All this, just three weeks after RIM agreed to pay half a billion to license them. The whole thing sounds pretty questionable. NTP (who might not even really have the rights to these patents) paid one company to license their own patents, pressuring the big fish (RIM) to then license them less than a month before the patent office rejected them. Whoever agreed to this deal on RIM’s part really has quite a few questions to answer. They just gave up half a billion for invalid patents on an obvious idea, after the company that might not own those patents had to pay off another company to license them. What was RIM thinking?

Rate this comment as insightful
Rate this comment as funny
You have rated this comment as insightful
You have rated this comment as funny
Flag this comment as abusive/trolling/spam
You have flagged this comment
The first word has already been claimed
The last word has already been claimed
Insightful Lightbulb icon Funny Laughing icon Abusive/trolling/spam Flag icon Insightful badge Lightbulb icon Funny badge Laughing icon Comments icon

Comments on “RIM Paid $450 Million For Patents That Aren't Valid”

Subscribe: RSS Leave a comment
george says:

normal patent procedure

I think you are crying foul a little too early. The patent office routinely rejects nearly every patent that is applied for the first time it responds. The applicant then has to argue what is different over the cited rejection art, and nearly always, the claims are then allowed. If fact, it is well known that ovelty is one of the easiest burdens to overcome when dealing with the patent office. This set of cases is what is called a re-exam, where the patents that were issued are looked at again, with some new eveidence in front of the patent office. While most re-exams narrow the coverage of the original patent, it is extrememly rare that the entire patent is ever found to be invalid by the patent office. It has happened at trial, but these were found valid at trial, so that is not going to happen. This process of re-exam will take years, and RIM needed freedom to operate during this period of time. So don’t count these patents out until the entire game is played. Like watching a good movie, we have to wait and see what happens in the end.

Derek Kerton (profile) says:

Not So Stupid Of The Execs

To be fair, I have the benefit of writing this in June, but I’m not sure I agree with what is written in the comments above, even with April knowledge.

Many people are asking why RIM ever agreed to pay, and are citing the execs as having made a mistake at that point.

The reason they agreed to pay is because the threat that NTP posed was so great. NTP was asking judges to put an injunction on RIM preventing them from selling any more devices, or from offering service to existing devices. And a judge agreed and gave NTP this injunction. RIM only squeaked out of this (kangaroo) court with a stay of the injunction, which delayed its implementation pending some other legal proceedings.

Now, how’s that for business risk? RIM is conducting business under the very real possibility that they will be legally required to stop selling their hardware, and their service.

Under this threat, existing RIM customers can get nervous and move off Blackberry, future customers may choose an email solution that isn’t at risk, and investors are well aware of this risk and it depresses the stock’s value.

RIM had been fighting these (greedy, anti-innovation, selfish) people at NTP for too long, and realized that it was hurting sales and stock price. When RIM announced they would settle at $450M, its stock price immediately rose 17%.

That 17% stock premium more than covers the $450M, so its not so clear that it was a bad executive decision. RIM frees up their sales team, and removes the sword of Damocles that (thanks to a lousy US Patent system, and equally inept court system) hung over their heads for far too long.

Above comments ask who gets fired, or who gets the pay cut to pay the $450M. The answer is: no one. RIM will need more staff to handle the greater sales and business that the settlement enables. The value of the company has risen, so their is more money to share, and all the employee options are worth more.

I wish we had courts and patent systems in the US that made more sense, and truly rewarded the innovators. But for now, successful, innovative companies and executives will get put in the un-enviable decision of suffering the consequences of court injunctions or paying off the ransom – neither option being good.

Add Your Comment

Your email address will not be published. Required fields are marked *

Have a Techdirt Account? Sign in now. Want one? Register here

Comment Options:

Make this the or (get credits or sign in to see balance) what's this?

What's this?

Techdirt community members with Techdirt Credits can spotlight a comment as either the "First Word" or "Last Word" on a particular comment thread. Credits can be purchased at the Techdirt Insider Shop »

Follow Techdirt

Techdirt Daily Newsletter

Techdirt Deals
Techdirt Insider Discord
The latest chatter on the Techdirt Insider Discord channel...