The maker of the BlackBerry portable email device on Friday struck an 11th-hour $612.5m settlement, ending the threat that more than 3m US addicts risk having their service cut off.
The agreement between Research in Motion, the Canadian company behind the iconic business tool, and NTP, a small intellectual property firm based in Virginia, comes days after a US judge delivered an abrupt warning that he would order an end to the service unless a settlement was reached.
The deal was agreed in principle after midnight on Thursday at the end of marathon talks at the offices of Citigroup in downtown New York, said one person familiar with the discussions.
It was formalised on Friday afternoon, and NTP’s patent infringement case in US district court was dismissed.
The one-off payment of $612.5m RIM will make in return for a license from NTP to operate the BlackBerry service is larger than the $450m that the two sides agreed in principle early last year. It reflects the growth in subscribers since then, as well as the threat of a damages award against RIM in a US court, the person close to the case said.
However, it is lower than the $1bn that NTP is understood to have sought in the negotiations. The earlier settlement collapsed when the two sides could not reach final terms.
The agreement will bring relief to the millions of BlackBerry users in the US who have come to rely on the gadget to juggle their business and personal lives. It is also used by around 1.5m people in Europe – RIM’s fastest-growing market.
The legal threat to the BlackBerry, one of the most successful new wireless technologies, has been held up in technology circles as a symptom of a dysfunctional US patent system that leaves successful inventors vulnerable to legal attack from companies with flimsy claims over their intellectual property.
According to RIM, the US Patent and Trademark Office has already issued preliminary rejections of all of NTP’s disputed patents, though an insider said it could take “years” for final decisions to be reached.
RIM had tried to boost its negotiating position last month by announcing a software “workaround” that would have allowed the US service to keep operating despite any injunction.
RIM’s shares jumped more than 17 per cent in after market trading on the news.