By Dale Campbell

Last week the United States Supreme Court denied the petition filed by the maker of the Blackberry seeking to overturn adverse rulings that the popular hand held email device violated patents owned by NTP, Inc., an East Coast based intellectual property holding company. The Supreme Court’s denial puts the Blackberry one step closer to enforcement of an issued permanent injunction.

This legal saga began when NTP, Inc. brought a patent infringement suit against Research in Motion, Ltd. (“RIM”) the maker of the Blackberry. The jury found that RIM’s Blackberry technology infringed numerous patents owned by NTP, including both apparatus and method patents. The jury awarded damages in favor of NTP and the Court issued a permanent injunction prohibiting RIM from making, using, offering to sell or selling in the United States any products or services related to the Blackberry which were found to have infringed NTP’s patents. The District Court stayed enforcement of the injunction until such time as the judgment was appealed.

The Court of Appeal for the Federal Circuit affirmed in part, reversed in part, and remanded in part. The Federal Circuit’s holding focused upon the territorial component of patent law as it applies to the Blackberry technology. The Appellate Court’s ruling was a mixed bag dependant upon whether NTP’s patented component was an “apparatus” or a “method” and whether the infringing act involved “using” or “making” the patented invention.

The “infringement” statute is found at 35 U.S.C. 271, and provides in pertinent part that “whoever without authority makes, uses, offers to sell, or sells any patented invention, within the United States . . . infringes the patent.” (Emphasis added.) The Supreme Court in Deepsouth Packing Company v. Laitram Corp., 406 U.S. 518 (1972) had previously considered the issue of whether a direct infringement occurred when all component parts of a patented invention were produced in the United States for export, assembly, and use abroad. The Deepsouth Court held that the export of unassembled components of an invention could not infringe the patent. Substantial manufacture of component parts in the United States does not suffice. Complete manufacture of the whole assembly in the United States was required. Consistent with the decision in Deepsouth, the Federal Circuit had ruled partly in favor of RIM as to the infringement claims involving allegations that RIM “made” the infringing apparatus, since certain components were not made within the United States.

However, the Federal Circuit, in determining whether the Blackberry system was “used” within the United States, reached a completely different conclusion relying upon Decca Ltd. v. United States, 544 F.2d 1070 (Ct. CL. 1976) as instructive precedent. In Decca, the Court found that navigational systems with stations outside of the United States could still be “used” within the United States for purposes of infringement analysis under Section 271(a). Accordingly, the Federal Circuit held a Blackberry apparatus could still be “used” in the United States even if one of the relays was located in Canada.

However, a different analysis applies to the claims regarding “method” patents. It is well established that a patent for a method is not infringed unless all steps or stages of the claimed process are utilized. A process cannot be “used” within the United States as required by Section 271(a) unless each of the steps is performed within the United States. Therefore, the method of using the interface switch located in Canada could not result in an infringing use of the “method” within the United States.”

RIM framed the issue on appeal as whether the Blackberry wireless email system, is used within the United States where “components critical to the systems’ operation are located outside the United States.” The issue as framed on appeal concerning “critical components” was a novel concept. RIM’s petition for certiorari posed the question as a new legal concept diverting away from the well established “all elements” rule which provides that “[e]ach element contained in a patent claim is deemed material to determining the scope of the patented invention.” Warner-Jenkinson Company, Inc. v. Hilton Davis Chemical Company, 520 U.S. 17, 29 (1997). The argument was whether the combination of multiple elements, one of which exists entirely outside the United States, will support an infringement claim for “use”. The United States Supreme Court denied certiorari without comment.

What now for Blackberry users? RIM has taken numerous steps to avoid the implementation of the injunction. RIM has challenged all of NTP’s underlying patents within the patent office. In mid- 2005, the patent office completed re-examination and preliminarily rejected all of NTP’s patent claims. RIM then petitioned the District Court to stay the judgment pending a final determination at the patent office. The Court stated it was unlikely to await the patent office decision saying the patent office did not control court business nor did the court control patent office business.

On a separate front, NTP and RIM have been attempting to negotiate a settlement during the pendency of all of the legal proceedings. A settlement was reached but the parties apparently disputed the interpretation of certain of the terms. RIM moved to enforce the settlement, but the District Court judge denied that request.

Shortly before the Supreme Court denied certiorari, NTP proposed a 30-day grace period prior to the implementation of the injunction which would provide RIM with time to implement the technological solutions it claims to have developed to work around NTP’s patents or, alternatively, provide time for Blackberry users to find alternative providers. The District Court has ordered briefing on the 30-day grace period to be submitted on February 1, 2006.

Pundits anticipate a settlement will be reached prior to shutdown of the Blackberry system. NTP is a technology holding company without any operations. The value of the judgment is realized only with a monetary settlement and not injunctive relief. While industry experts expect a settlement to be reached, RIM is now being squeezed into finding such a solution promptly as its legal options are about to run out