U.S. judge backs RIM in patent dispute with Mformation

TORONTO Fri Aug 10, 2012 12:50am IST

The exterior of one of the Research In Motion Limited (RIM) buildings is seen in Waterloo July 10, 2012. REUTERS/ Mike Cassese

The exterior of one of the Research In Motion Limited (RIM) buildings is seen in Waterloo July 10, 2012.

Credit: Reuters/ Mike Cassese

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TORONTO (Reuters) - A U.S. judge has overturned a $147.2 million jury award against Research in Motion Ltd, ruling that the BlackBerry maker has not infringed a Mformation Technologies Inc patent covering a remote management system for wireless devices.

Wednesday's ruling, outlined in court documents, gives RIM a much needed reprieve as it battles to conserve cash and turn around its fast-fading fortunes. More nimble competitors have outgunned RIM in recent months, luring away many long-time BlackBerry users.

Crucially for RIM, U.S. District Chief Judge James Ware also granted RIM's motion seeking a new trial if a higher court overturns his ruling. This means that the jury award cannot be reinstated should Mformation successfully appeal the new ruling.

RIM, whose share price has fallen over 70 percent this year as its devices have ceded ground to a new crop of smartphones like Apple Inc's iPhone and a range of devices that run on Google Inc's Android software, cheered the ruling.

"We appreciate the judge's careful consideration of this case. RIM did not infringe on Mformation's patent and we are pleased with this victory," said RIM's Chief Legal Officer Steve Zipperstein in a statement on Thursday.

Mformation, which helps companies manage their smartphone inventory, said it is assessing its legal options and will determine its next steps shortly.

"Mformation is deeply disappointed that the court would overturn a jury verdict after a month of trial including a week of thoughtful deliberation by the jury," Chief Executive Todd DeLaughter said in an email.

RIM shares rose more than 5 percent early on Thursday to $8.03 on the Nasdaq, but pared gains later in the day and were up 1.1 percent at $7.70 at 1500 ET. Its Toronto-listed shares were up 1.6 percent at C$7.68.

Mformation sued RIM in 2008 and the jury trial began in June. The jury ruled last month that RIM had infringed the Mformation patent and awarded the New Jersey-based company $147.2 million in damages.

Waterloo, Ontario-based RIM argued that the jury did not have sufficient evidence to reach this verdict and sought to have it overturned by the judge, who was overseeing the trial.

"The court finds that there was no 'legally sufficient evidentiary basis' on which a reasonable jury could have found for Mformation on the issue of infringement," said Judge Ware in his ruling.

RIM is no stranger to patent litigation - it was almost crippled by a five-year patent fight with NTP that began in 2001 and at one point threatened to shut down RIM's U.S. operations. RIM eventually paid out more than $600 million to NTP Inc, a patent holding company, to settle that case.

RIM said the dispute with Mformation highlights the need for reforms to patent laws.

"The purpose of the patent system is to encourage innovation, but the system is still too often exploited in pursuit of other goals," said Zipperstein.

The case in U.S. District Court, Northern District of California is Mformation Technologies Inc vs. Research in Motion Ltd et al., 5:08-cv-04990.

(Reporting by Euan Rocha in Toronto and Sakthi Prasad in Bangalore; Editing by Mark Potter and Janet Guttsman)