Research in Motion and its Lawsuit Headaches - Annoyances and a Major Concern

As Research in Motion gets itself ready for the upcoming launch of BlackBerry 10 and its new devices on January 30, 2013 – and amidst some generally good news for the company relative to how the launch may be perceived by the rest of the world – the company suddenly (in one case) and not so suddenly (in another) finds itself having to deal with technology lawsuits once again. Specifically there are two current issues – one with Wi-LA – an annoyance we think, but who needs annoyances now? – and one with Nokia, which we’ve covered previously and which may have a significant financial impact on RIM.

Patent licensing company Wi-LAN announced today that it has – surprise! - filed a patent infringement lawsuit against RIM for allegedly infringing on a patent that relates to Bluetooth. The company – which is one of those entities that many of us simply refer to as patent trolls – notes that it filed in the U.S. District Court for the Southern District of Florida against RIM. 

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Why a troll? Wi-LAN simply collects patents then looks to find infringers to threaten with lawsuits and collect money against. It doesn’t create anything, it doesn’t actually use its patents in any products, and it doesn’t invent any technology that leads to patents. It’s one of the issues that have long swirled around the entire patent process in the United States, and the ability for patent trolls to file such lawsuits is often pointed to as a broken piece of the patent process.

We’re not here to focus on that however – we don’t like patent trolls but it’s a long discussion to be had elsewhere. Our concern is whether or not it may affect RIM and its efforts to pull itself together and rejuvenate its business in 2013.

Wi-LAN has supposedly managed to license its “intellectual property” to more than 255 companies worldwide. It alleges that RIM infringes its U.S. Patent No. 6,260,168, which is related to Bluetooth. Wi-LAN has also managed to launch a collection of other such lawsuits, including one last week against Apple, HTC and Sierra Wireless's U.S. unit over LTE mobile technology. We view the LTE lawsuit as a minor annoyance for Apple, a larger annoyance for Sierra Wireless (a company that actually does original research and creates original patents), and a potentially significant issue for cash-strapped HTC, which has had a tough 2012 and is, like RIM, looking to recover its footing.

What is most interesting about something that is not particularly interesting is that Wi-LAN alleges that RIM's PlayBook tablet and a collection of mostly old, including the Bold, Torch, Pearl and Storm utilize technology that infringes on its patent. Pearl and Storm?! We hope RIM is able to knock this one out of the way quickly and treat it as nothing more than an annoyance.

Nokia is a Real Roadblock

The Nokia issue, on the other hand, is far more serious and far more real in terms of where RIM stands legally. It has already lost in court on Wi-Fi patent issues, and more recently another patent Nokia holds on wireless security - The new patent issue relates to patent EP0824813, which covers "improving security of packet-mode transmission in a mobile communication system." It sounds geeky as opposed to Apple “design” patents and it is, but Nokia likely has a case against RIM here. 

For a great many more insightful details on this and for those among us who love to read such details, we defer to our preferred patent expert, Florian Mueller and his patent blog site. Mueller points out that “Nokia is not accusing RIM of infringing this patent with its implementation of GPRS, but with the implementation of the security mechanism it covers by the BlackBerry Enterprise Solution and client devices used to access the BlackBerry service.”

We have serious concerns about RIM and how they are handling these Nokia-related issues. RIM needs to sit down with Nokia and figure out how to deal. All of those investors who are currently thinking about riding RIM into 2013 should be paying attention. Nokia is in a very strong position here that, as far as we are able to discern, they are in specifically because RIM has misplayed its hand. Rather than deal, RIM chose to battle, and it may ultimately have nasty financial ramifications. Nokia may find itself in a position to gain a real injunction against RIM – especially in the United States – and even a whiff of such a thing can end up derailing RIM next year.

RIM has its hands full with the upcoming launch. Wi-LAN can’t be helped, it is what it is and it will need to run its course to some minor conclusion. Nokia, however, is in a power position and RIM needs to resolve the situation ASAP.