Software patent infringement costs BlackBerry $147.2M

Following a three week federal trial in San Francisco, BlackBerry maker, Research in Motion (RIM), has been found guilty of patent infringement and ordered to pay $147.2M in damages to mobile device management software maker, Mformation Technologies.

The patent in question involved a 1999 invention which underpins a range of over-the-air mobile device management activities, including “managing, controlling, and reconfiguring wireless devices remotely over a wireless network with acceptable reliability and security”. Common uses for the invention is remote access by employers to upgrade software on employees phones, or to wipe data in the case of loss or theft.

The jury ruled that the software was at the heart of privately held Mformation’s business and had been fundamental to the success of Research in Motion. Subsequently, RIM has been ordered to pay $US8 for each of the 18.4 million BlackBerry devices that were connected to the Blackberry Enterprise Server, from the day the lawsuit was filed until the time of the trial.

RIM has issued a statement saying that it plans to fight the ruling. “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 statement.

The trial is the latest in a string of publicised losses for the pioneering smartphone manufacturer. Following a tumultuous, headline-grabbing annual meeting, RIM announced the release of its latest operating system would be delayed further still, missing the holiday shopping period. Adding insult to injury, its share price recently dropped to a nine year low, at just over $US7 (it traded at $30 a year ago) and losses for the quarter ending June 2 were reported at $US518M.

With consumers demanding greater sophistication from their phones than simply call and email functions, BlackBerry is losing significant ground to devices like the iPhone and those on the Android platform. When the iPhone was launched in 2007, RIM’s market share was estimated at 41% – come the first quarter of 2012, BlackBerry’s hold had slipped to a mere 4%.

At the recent annual meeting, CEO Thorsten Heins indicated that attempts to reverse the company’s flagging performance will centre around cost reduction. This includes the redundancy of 5000 employees, reduction of external manufacturing sites from 10 to 3 and the streamlining of product lines to sell fewer device models.

“RIM is awaiting more information before deciding their next move. “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,” RIM’s statement said.