The nation's leading court on patent law has ruled that the Canadian company that makes the popular BlackBerry wireless e-mail device engaged in patent infringement.
Defendant Research in Motion Ltd. "is going to be out of business in the United States," said James H. Wallace Jr. of Wiley, Rein & Fielding in Washington, D.C., attorney for plaintiff NTP Inc.
Arlington, Va.-based NTP filed suit against Research in Motion in the U.S. District Court for the Eastern District of Virginia, alleging infringement of five patents directed at an electronic mailing system. A jury found in NTP's favor and awarded the company $53.7 million in damages.
Following the verdict, the District Court permanently enjoined RIM from further infringement, although it stayed the injunction pending appeal.
RIM appealed to the U.S. Court of Appeals for the Federal Circuit.
The company said Section 271(a) of the Patent Act applied because the relay component of the accused system was located in Canada. The relay is the part of the system that translates and routes e-mail messages from the processors in a user's e-mail system to the wireless networks in the BlackBerry system.
The Federal Circuit's Ruling
The Federal Circuit panel disagreed with RIM's argument.
"The plain language of Section 271(a) does not preclude infringement where a system such as RIM's, alleged to infringe a system or method claim, is used within the United States even though a component of that system is physically located outside the United States," the appeals court said.
The panel said even though one of the accused components in RIM's BlackBerry system may not be physically located in the United States, the location of the beneficial use and function of the whole operable system assembly is the United States.
En Banc Rehearing
RIM asked for rehearing en banc by the full court. It argued that the panel erred because Section 271(a) imposes liability for patent infringement on activity that occurs within the United States, not for control of a patented invention.
On rehearing, the Federal Circuit reversed or vacated several of the infringement claims against RIM based on differing claim constructions, remanding them to the District Court for further proceedings.
Nonetheless, it left seven of those claims intact.
On the Section 271 issue, the Federal Circuit affirmed the lower court's decision with respect to system claims.
When RIM's U.S. customers use their devices in the United States, the location of the use of the communications system as a whole occurs in the United States.
The court reached a different conclusion regarding NTP's asserted method claims, which refer to the several different steps that are used to transmit messages.
The court said that under Section 271(a), the concept of a use of a patented method was fundamentally different from the use of a patented system or device.
The Federal Circuit said that in considering method claim, a process cannot be considered to be used within the United States, as required by Section 271(a), unless each of the steps is performed within this country.
Since each of the method claims recited at least one step that utilizes an interface switch located in Canada, there could be no liability for infringement under Section 271(a).
The Federal Circuit vacated the damages award and injunction and remanded the case to the District Court for further proceedings.
Whether the case lands there or ends up first in the U.S. Supreme Court remains to be seen. Although RIM's counsel was not available for comment, NTP attorney Wallace said he anticipates that RIM will seek review in the high court.
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NTP Inc. v. Research in Motion Ltd., No. 03-1615, 2005 WL 1806123 (Fed. Cir. Aug 2, 2005).
Courtesy of Deborah Nathan, Esq. of Andrews Publications.