NTP: Why its patent suit vs. Apple, Google, Microsoft, HTC etc stands a chance

NTP may have some precedent on its side to force the likes of Apple, Google, HTC, LG, Microsoft and Motorola to pay up for patents.

It's easy to dismiss NTP Inc. as a patent troll especially after the company---holder of patents for wireless email technology---sued all of the major players of the smartphone industry last week. But NTP may have some precedent on its side to force the likes of Apple, Google, HTC, LG, Microsoft and Motorola to pay up.

In a statement Friday, NTP announced its latest effort to enforce its patents. If you recall, NTP and Research in Motion had a long-running patent spat that was finally settled in March 2006. RIM paid NTP $612.5 million to make NTP go away. Enterprise customers were wary of RIM's products in light of the NTP lawsuit.

Download: NTP's complaint against Apple

At the time, RIM co-CEO Jim Balsillie said a broad patent deal with NTP was worth it even if the U.S. Patent and Trademark Office eventually overturned NTP's patents. Balsillie said in a CNet News report from 2006:

"The scope relates to all of NTP's patents and relates to all of RIM's products. We really did this to give certainty, and calmness and comfort to our ecosystem."

RIM's comfort appears to be a real pain in the backside of the wireless industry now. The RIM case gave NTP some mojo to sue other wireless players. What took NTP so long to sue the others? Turns out NTP was waiting to make sure it had a favorable USPTO ruling for its patents. NTP said in its statement:

In December 2009, in spite of the massive effort by the USPTO to overturn NTP's patents, the USPTO Board of Patent Appeals (USPTO Board) ruled that 67 of NTP's patent claims in four patents are valid, including three claims that RIM was found to have infringed.  Infringement of a single claim is all that is needed for a patent to be deemed violated. NTP has also filed an appeal to the U.S. Court of Appeals for the Federal Circuit to overturn the USPTO's remaining rejections of NTP's patent claims.

Simply put, NTP now has all the ammo it needs to go after the industry. NTP's complaint against Apple reads like the others against HTC, Motorola and the rest of the gang.

In a nutshell:

  • NTP outlines its patents which revolve around e-mail systems for wireless communications. These patents were awarded to Thomas Campana, the inventor of wireless email.
  • NTP says that the same patents in its complaints against the wireless industry are the ones RIM paid for. An excerpt from the NTP complaint against Apple:

  • The USPTO has upheld NTP's patents.

Now NTP has other civil lawsuits against Palm, T-Mobile, Verizon, AT&T and Sprint and none of those have turned out as well as the RIM settlement. However, those lawsuits are still ongoing.

The big question here is whether NTP has the firepower to take on the likes of Google, Apple, Microsoft and others. Here are a few reasons why NTP can't be counted out:

  • Home court judge. NTP's complaints are going to Judge James Spencer, who ruled against RIM repeatedly.
  • NTP has a lot of precedent with its long war with RIM over its patents.
  • The strategy of waiting out NTP for the USPTO to re-examine patents won't work because that evaluation is already history.

For RIM, paying off NTP was a good business move. RIM eased enterprise concerns and locked up the corporate market after paying off NTP.

Here's a RIM stock chart with the NTP settlement highlighted:

The calculus will be different for the wireless giants recently named in latest NTP lawsuit. Meanwhile, the patent lawsuits are likely to go on for a while. You can argue that NTP is a patent troll, but there's little doubt that it's a pesky one that can win a few of these skirmishes.

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