NEW YORK – Research In Motion Ltd. (RIMM), the Canadian maker of BlackBerry wireless e-mail devices, said Wednesday it will pay $450 million to resolve litigation with NTP Inc. (NTP), a Virginia company which said the devices infringed on in its patents. Its shares soared more than 18 percent in early trading.
Under terms of the agreement, NTP will grant the company and its customers the right to continue its BlackBerry (search)-related wireless business without further interference from NTP or its patents.
Research in Motion's U.S. shares jumped $12.38, or 18.5 percrent, to $79.47 in early trading on the Nasdaq Stock Market. Its shares have traded in a range of $41.55 and $103.56 over the past 52 weeks.
The dispute began in 2002 when NTP, based in Arlington, Va., claimed that RIM infringed on 16 of its patents, including its radio communications technology.
In August 2003, a U.S. court in Virginia agreed that 11 of those 16 patents were violated and awarded NTP $54 million in damages, as well as an 8.6 percent royalty on all the revenue from U.S. Blackberry sales. The court also ordered an injunction to prevent RIM from making or selling its devices in the United States.
The injunction was stayed, however, while RIM appealed. On Dec. 14, a three-judge U.S. appeals court panel struck down the verdict and injunction yet upheld most of the patent infringement claims, sending the case back to the lower court for reconsideration.
RIM claims its BlackBerry relay server — through which all e-mails pass — is based at its base in Waterloo, Ontario, so U.S. patent laws have no jurisdiction, even though most of its 2 million subscribers are below the 49th parallel.
On Wednesday, Research In Motion said the settlement fee relates primarily to past damages, and includes the $137 million judgment currently held in escrow. The company said it expects to expense most of the remaining $313 million in the fourth quarter ended Feb. 26.
NTP and Research In Motion plan to finalize the terms of this agreement in upcoming weeks.
The company said further comment and details will not be disclosed until the company's fourth-quarter conference call on April 5.