Taking It to Court

NTP knew what it had in the patents: in a lawsuit, if even only a single infringement claim would withstand a validity challenge, the company would win. Combined, the Campana patents had over 2000 such claims. On 27 January 2000, NTP placed RIM on notice regarding six of the patents and offered a license. Charles Meyer, RIM's in-house attorney, talked with his staff and quickly (too quickly it later turned out) concluded there was no infringement.

When RIM refused to take a license, NTP filed suit during November of 2001 in Richmond, home of Virginia's Federal District Court. On this court's "rocket docket" things move fast: despite numerous RIM motions (most failed), a jury was impaneled within a year. After a 13-day trial, it found RIM guilty on 14 infringement claims represented in five NTP patents. Presiding Judge James Spencer said the case was not even close. Even before the verdict, he had summarily ruled that RIM infringed four claims across three patents.

Apart from the monetary damages, ultimately totaling $53.7 million, the biggest threat to RIM was an injunction, which could essentially shut down the BlackBerry system. To stave off that possibility, the company filed requests with the PTO for reexamination of the patents, moved for a new trial, filed an appeal, and moved to stay all court proceedings pending the reexamination. The odds were good (90 percent) that the Patent Office would take a second look but poor (12 percent) that it would strike all the claims.

The motion for a new trial didn't work and neither did the request to stay pending reexamination; but luckily for RIM, the appeal was reason enough to hold off on implementing the injunction until the Court of Appeals for the Federal Circuit in Washington, D.C. could review the rulings and verdict. That wouldn't be decided for some time. Meanwhile, RIM went to work on damage control. A finding of willful infringement could triple the jury's $34.4 million damage award and force RIM to pay NTP's attorney fees.

First RIM attempted to convince Judge Spencer that it had a good faith belief it hadn't infringed the patents. Citing the noninfringement conclusions of in-house attorney Meyer, RIM argued the infringement couldn't have been willful and thus enhanced damages weren't appropriate. Judge Spencer, however, found Meyer's opinions incompetent because they were based on insufficient information and lacking in objectivity, given that he worked for RIM. Spencer also found RIM's behavior during litigation to be egregious. Still, treble damages weren't warranted in his view since RIM didn't know about the patents when it developed the BlackBerry system. As a result, he enhanced the $33.4 million award by a factor of just 0.5 to $47 million.

For Spencer to award NTP the $5.25 million it spent on attorneys during litigation, he had to find the case exceptional (which he did given RIM's litigation behavior and limited investigation after receiving NTP's notice) and the fees reasonable. He held the fees were justified when shown that RIM's attorney bill in a single quarter amounted to $4.9 million. But because NTP filed suit claiming infringement of eight patents having a combined total of over 2400 claims, then later asserted only five patents and sixteen claims at trial, the judge cut 20 percent from the $5.25 million, for a total of $4.2 million.