Why is RIM On the Hook for $147.2M Payout?
Things keep getting worse for Research in Motion (NASDAQ:RIMM). While the BlackBerry maker struggles to make a comeback after falling way behind Apple (NASDAQ:AAPL) and Google (NASDAQ:GOOG) in the smartphone market, a San Francisco jury has found it liable for $147.2 million in damages for infringing patents held by Mformation Technologies.
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Mobile-device management software maker Mformation had sued RIM in 2008 after alleging that the latter infringed on two of its patents related to the BlackBerry Enterprise Server, a software that allows companies to manage workers’ BlackBerry devices remotely. Mformation said it had disclosed details of the technology to RIM during licensing discussions, but that the latter simply modified the software. RIM said the patents were invalid.
But the jury has now ruled that RIM should pay a royalty of $8 for each of the 18.4 million units of the software, for a total payment of $147.2 million. The damages only relate to royalties on past sales in the U.S. and does not cover future sales or sales outside the U.S., which means the overall fine could go up by two to three times.
RIM, whose share of the global smartphone market fell by more than half to 6.4 percent in the first quarter, has already delayed the launch of its new BlackBerry 10 device twice. The company is relying on the new phone to stabilize its falling fortunes and a plunging stock price. The company is cutting 5,000 jobs and is even considering strategic options to rescue itself from its recent loss-making spiral.
“RIM has worked hard for many years to independently develop its leading-edge BlackBerry technology and industry-leading intellectual property portfolio, and RIM does not believe that the Mformation patent in question is valid,” the company said in a press release.
It added that it would evaluate further legal options. “Additionally, the trial judge has yet to decide certain legal issues that might impact the verdict. RIM will await those rulings before deciding whether to pursue an appeal.”