The end of the affair: RIM cuts $612m BlackBerry deal

RIM and NTP have agreed to settle the long-running patent dispute over the BlackBerry device for $612.5m, the companies announced in a press release on Friday. Under the agreement, RIM will receive a licence to NTP's patents going forward, they said.

The agreement involves a one-time payment to NTP, RIM co-CEO Jim Balsillie said during a Friday afternoon conference call. Even if the US Patent and Trademark Office (USPTO) eventually overturns NTP's patents, NTP will not have to repay the $612.5m. "There is no provision for the [US]PTO re-exam. This is a full and final settlement," he said.

Balsillie added: "It's very important we got the scope we wanted. The scope relates to all of NTP's patents and relates to all of RIM's products. We really did this to give certainty, and calmness and comfort to our ecosystem."

RIM and NTP briefly agreed to settle the case for $450m in March of 2005 but that deal later fell through.

Dennis Kavelman, RIM's chief financial officer, said RIM was feeling the effects of enterprise customers waiting for resolution in the case before expanding their current BlackBerry usage or upgrading to new hardware and software.

Balsillie expressed his frustration with Judge James Spencer's inclination to move forward with the case and not wait for the USPTO to complete its re-exam. "It was surprising and disappointing that the court wasn't going to put much weight on the final office actions.

"It's a lot of money for patents that will not survive, for sure, but that doesn't do us any good if there's a court that doesn't wait."

The agreement comes one week after the companies argued over whether Judge Spencer should impose an injunction on the sale and support of BlackBerry devices in the US. During that hearing, Spencer expressed his frustration that the companies hadn't settled their dispute, and promised to rule promptly on the injunction.

Patent lawyers agreed that strong words from Judge Spencer last week hinted at an injunction in RIM's future and played a major role in the speedy resolution.

The judge's ready acceptance of the parties' settlement and dismissal of their case on Friday "is indicative of the fact that he was sitting on an injunction, ready to go," said Paul Andre, an intellectual property partner at Perkins Coie in Silicon Valley. In situations where an injunction appears imminent and the patent holder is willing to grant licences, it's fairly standard for parties to settle, he said.

Trading in RIM stock was halted prior to the announcement. When the shares started trading again in the after-hours market they immediately jumped $10.43, or 14.5 per cent, to $82.35.

Months of uncertainty regarding the BlackBerry took a financial toll on RIM, the company said in Friday's press release. RIM said after trading on Friday that sales for its fourth fiscal quarter, which ended on Saturday, would be in the range of $550m to $560m - lower than the $590m to $620m guidance the company had provided in December. But sales were still well above RIM's $404.8m total for the same quarter a year ago.

Profits per share, excluding costs related to the NTP litigation, were expected to be between 64 cents and 66 cents. The company had forecast profits per share of 76 cents to 81 cents.

Net subscriber accounts for the quarter were expected to be in the range of 620,000 to 630,000, well below the 700,000 to 750,000 forecast in December.

In recent weeks, the prospect of a BlackBerry shutdown had loyal users of the device fretting about the prospect of losing their mobile email service.

A US Department of Justice spokeswoman said: "We have been informed that the case was amicably settled and we are pleased that the resolution reached will preserve the public interest in the use of RIM's technology." The department had argued before the court that a BlackBerry shutdown would be devastating to government users.

On Capitol Hill, stomping grounds for hundreds of 'Berry-dependent politicians and staffers, the details of the settlement had not yet been digested but drew initial positive reactions.

John Brandt, communications director for the US House of Representatives Administration Committee, which oversaw the purchase of BlackBerrys for all 435 House members back in 2001, said: "If this means that service will not be disrupted in any way, shape or form, then obviously, we're very happy that's the case."

The news was welcome in other quarters as well.

Frank Gillman, chief technology officer at the Los Angeles law firm Allen Matkins, said: "Those of us who rely on instant access to our corporate email are breathing a huge sigh of relief - our significant others, maybe not."

The settlement announcement was no surprise to Michael Sacksteder, a patent litigation partner at Fenwick & West in San Francisco. "When you are terrified and hopeful at the same time, and you're going to find out one way or another soon, that's when parties tend to resolve what have seemed to be unresolvable situations," he said.

Sacksteder said he thought NTP would continue to pursue appeals of the patents for which the US Patent and Trademark Office recently issued "final office actions" rejecting their validity, noting that "there might be other targets" for infringement claims from the company.

A representative for NTP declined to comment beyond a press release distributed by the company on Friday. Donald Stout, NTP's co-founder, said in the release: "NTP is pleased the issue has been resolved and looks forward to enhancing its businesses."

Rob Enderle, principal analyst with The Enderle Group, said: "It's better late than never. But their customer base is not going to forgive them for RIM turning them into cannon fodder during the process."

Tim Bajarin, president of Creative Strategies, said: "Bottom line, this is very good news for BlackBerry users. It means their service will continue, and it allows RIM to continue going after corporate business."

Tom Krazit and Anne Broache write for CNET News.com