The lessons from NTP-RIM

The prolonged patent fight between NTP Inc. and Research in Motion Ltd. (RIM) is finally settled, but it offers a number of lessons for IT managers, analysts said.

The case, resolved early this month with a payment by RIM of US$612.5 million to NTP, shows that IT managers should be prepared when buying technology subject to a patent infringement lawsuit that could require expensive and frustrating workarounds or lead to an outright shutdown.

“The first lesson learned is don’t panic,” said Jack Gold, an analyst at J. Gold Associates in Northboro, Mass. “Markets have a way of adjusting without massive disruptions of service.”

Gold also urged managers to remember that anytime a company buys into a proprietary service, it risks problems if the supplier goes defunct. And he stressed that companies should have workable contingencies in place. “Not having a contingency plan is a dangerous position to be in,” Gold said.

Companies, especially those with large numbers of users, also should ask suppliers for some kind of indemnification plans in case the technology go south.

Even before asking a potential vendor for a guarantee, IT managers should ask a series of tough questions before signing off on deals, said Ken Dulaney, an analyst at Gartner Inc. in Stamford, Conn.

For example, Dulaney said, if a vendor claims a patent on the technology being considered, an IT manager should ask whether the patents are pending or have already been granted.

“The only reason they mention patents, usually, is to try to impress you,” Dulaney said.

More important, in light of the NTP fight with RIM, is to ask whether a vendor has been to court over a patent. “I’d discount their claims about a patent totally until they’ve been to court” and have won the right to the patent there, Dulaney said.

It’s also useful to find out whether the vendor has requested licenses from other vendors using the same technology, Dulaney said.

If anything, NTP’s aggressiveness should have taught the technology world that a patent is not a sure thing, he said.

“Anytime you purchase a vital product you must ask: ‘Has anybody notified you that you are in violation on your patent?’ Or better, ‘Do you expect anybody to say you are in violation?’ That kind of question is becoming important as part of [the IT manager’s] valuation of tech.”

Dulaney said NTP was so aggressive with RIM that he wonders if NTP will sue other companies, including the service providers that move wireless e-mail traffic to BlackBerry enterprise servers and to BlackBerry handhelds.

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