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11/8/2006
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Same Old Song: NTP Sues Over Patents, This Time Palm Is The Victim

Customers don't need to panic since any outcome is months or years away, say experts.

Palm, the No. 2 smartphone maker in the United States, finds itself in the midst of a legal battle that its rival, BlackBerry maker Research In Motion, went through not too long ago. For Palm customers, that means worrying about the future of widely-used Treo smartphones, just like BlackBerry users worried about the courts pulling the virtual plug on their devices.

Only months since receiving a $612.5 million settlement from RIM in a patent-infringement lawsuit, NTP is seeking an injunction against Palm. NTP filed a lawsuit in the U.S. District Court for the Eastern District of Virginia this week, claiming that Palm's products infringe on seven of its patents related to the transmission of wireless e-mail. NTP made the same claim when it sued RIM.

Palm denies the validity of NTP's patents. "The NTP patents disclose a pager-based e-mail service that has nothing in common with the mobile-computing devices invented by Palm," the company said in a statement. The seven patents have been rejected by the U.S. Patent and Trademark Office in preliminary examinations and are currently being re-examined, according to Palm. Preliminary and secondary examinations are necessary in such cases, before a final decision is reached.

NTP said it tried to resolve the patent issue with Palm, and only filed suit after those talks failed. But Palm says the patents were already under review by the Patent Office when it had talks with NTP several months ago about a licensing agreement. Palm says it's disappointed by NTP's actions to sue on patents of "doubtful validity" after months of silence. The company plans to defend itself against the lawsuit. Palm Treos have become popular among businesspeople, especially with the introduction of Treos use of the Windows Mobile operating system, which is designed to push e-mail directly from Microsoft Outlook to Windows-based smartphones. It's now common for companies to give their employees a choice between Treos and BlackBerrys for wireless e-mail and access to business applications.

History shows that patent-infringement lawsuits can scare customers and potential customers. When NTP took RIM to court, BlackBerry users began putting together contingency plans. Around the same time, RIM lowered its subscriber growth forecast from between 700,000 and 750,000 to between 620,000 and 630,000 for the fourth quarter, citing uncertainty surrounding the NTP litigation and U.S. users postponing BlackBerry purchases.

Palm claims NTP's patents don't relate to its products. Palm supplies smartphones to customers and offers them a choice of wireless e-mail services from partners like Good Technology and Intellisync, whereas RIM sells both smartphones and a proprietary wireless e-mail service. It was the service that NTP claimed infringed on its patents.

Palm users don't need to panic. "Any customer-related effect would be years down the line for this case," says Chris Renk, a partner at law firm Banner & Witcoff Ltd.

Earlier this year, the Supreme Court ruled that trial courts must not automatically impose an injunction for patent infringement, following a lawsuit filed by MercExchange LLC, a three-man holding company, against online-auction house eBay. Roughly a third of cases have been denied injunction requests following the eBay-MercExchange case, says John Rabena of Sughrue Mion PLLC, a practice of intellectual property law. "Times have changed. Palm doesn't face a threat of a definite injunction like RIM did," Rabena says.

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