NTP vs. RIM: A good deal for lawyers

The adage that in lawsuits the only sure winners are the lawyers is doubly true in the years-long patent battle between Research in Motion, maker of the BlackBerry handheld, and NTP, a company with one asset — the disputed patent — that was brought into existence to fight RIM. And then there’s Microsoft — but we’ll get to them.

This topic looked like it was about to fade from the headlines as a result of the US$612.5 million settlement that NTP accepted from RIM a few months back. But now RIM must deal with another legal challenge from software provider Visto, which claims RIM’s BlackBerry service violates four Visto patents. The lawsuit seeks unspecified damages and asks the court to shut down BlackBerry’s service in the U.S.

The residual impact on the IT world from these legal battles could last much longer.

That is where Microsoft comes in. The company’s mobile messaging offering is based on and integrated into its flagship messaging hub Exchange Server 2003 solution, which competes with RIM’s BlackBerry. Like other contenders, Microsoft hadn’t had huge success prying RIM’s fiercely loyal customers away from it. But the protracted patent battle had an impact.

For once Microsoft wasn’t the one being sued. With the real possibility of a U.S. judge ordering the BlackBerry service to be shut down, even many loyal customers started to make contingency plans. (RIM assured customers that it had developed an alternate, “non-infringing” version of its service, but at least some users were unwilling to bank on this.)

In Microsoft’s case, the absence of a negative (a patent lawsuit) was a definite positive. Combine that with the fact that virtually every company has a collection of Exchange Server systems at its core, and it’s easy to see why firms would want to understand how a mobile Exchange offering might be able to take over from the BlackBerry service.

Which brings us back to the lawyers. Faithful BlackBerry users did not ask for a change, but the action of the NTP lawyers served as a catalyst and, in effect, forced it upon them.

It would have been interesting (theoretically speaking) if the judge had shut down RIM and said “Okay, NTP, it is all yours” because they had nothing but a piece of paper. There was no service that they could unleash to replace RIM. It wasn’t a Netscape vs. Internet Explorer battle in which there were two viable alternatives.

While the RIM battle sparked discussion of patent reform, I believe a shutdown with nothing to replace it would have ensured that serious reform took place. And while we are at it, we might as well look at the final lawyer-profit scorecard.

The Washington, D.C., law firm representing NTP scored about US$200 million from the deal, or a little less than $3 million for each of the 67 partners. You might call them instant millionaires, but I have a feeling that many already were in that category.

NTP has about two dozen shareholders to split the remaining $400 million, according to The Wall Street Journal. About half of them are — you guessed it — patent attorneys at a Beltway firm. And the inventor? He died in 2004.

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