three-judge panel at the Patent Office, as well as to a federal appeals court, before the patents are struck down.
But NTP will still be entitled to any damages awarded as part of Friday's hearing. Damages awarded for patent infringement through a trial are still valid, even if the patents are later struck down. NTP would lose the right to seek future damages, but it could collect the almost US$250 million currently sitting in escrow without having to pay it back later.
The morning opened with arguments from two NTP lawyers, who split their time arguing in favor of an extended damage award and an injunction on BlackBerry service.
"The world, we suggest, will not come to an end," should the service be shut down, NTP attorney James Wallace argued.
If nothing else, RIM's own publicly divulged work-around would undo any harm RIM claimed an injunction would cause it. RIM had said its work-around will allow it to bypass the claims in NTP's patents by changing the way the BlackBerry system delivers e-mail messages and queues messages that can't be delivered because the recipient is out of their coverage area.
Far from powerless, RIM would have at least three options if the injunction were issued, NTP attorney John Wyss argued: They could leave their users "high and dry," implement the work-around for all of their customers, or allow only "exempt" government users to keep using the service.
Wallace attempted to cast doubt on the company's seriousness about its work-around solution. "Even though they proudly trumpet what they term is 'alternative noninfringing technology,' they still prefer to use the NTP technology to this day," he said.
RIM's attorneys downplayed the work-around as a solution; lawyer Henry Bunsow did not even address the concept until about the last fourth of his presentation.
"It's not something that can be done overnight," he said, estimating that implementation would require about 2 million hours of labor and would also include "extensive public costs."
Justice Department attorney John Fargo told the judge that any work-around "is going to require at least validation." He said the government also has lingering doubts about the technical feasibility of exemptions for government users, which the Bush Administration has urged.
Attorneys from both companies focused a good deal of their arguments on that issue.
NTP attorney Wyss emphasized that NTP "agreed there should be express exclusion that would fully protect the U.S. government." Any injunction order, they said, should include an "exemption paragraph," derived from the Justice Department's suggestions, that would allow government users to continue using BlackBerry service. They said government contractors could also qualify for the exemption if the government sent a letter to RIM certifying those workers as such.
Wyss also outlined a number of methods, such as pulling information invoices for BlackBerry services ordered by government users, which he claimed RIM could use to determine which users would fall into the exemption category--what both parties have deemed the "white list."
RIM attorneys, for their part, argued that separating out government users would be "wholly impractical" and that it was unclear who would fit into which categories.
And besides, the government exemption endorsed by NTP wouldn't prevent cutting off such people and other critical private-sector workers, Bunsow said, citing excerpts from more than a dozen testimonies from those primarily involved in homeland security, energy and health care sectors.
Hoping to ratchet up RIM's "public interest" defense, he painted the BlackBerry at length as a "lifeline" for users from a wide variety of industries, from doctors dealing with organ transplants to volunteers helping in hurricane crises.
There was also talk from both sides of a licensing proposal that NTP has offered to RIM, as it has done with other mobile e-mail device makers. But it was clear that they were far from reaching an accord on that front.
Bunrow blasted the proposal, calling it "illusory" and accusing it of opening doors to new litigation by NTP against service providers such as Cingular and T-Mobile, with which RIM partners--an allegation that NTP forcefully denied.
"We want to keep you in business; it's just time to pay up," Wallace said, comparing RIM to "squatters in your nice house" who would turn down an offer to rent the place.
The debate, as has been customary during the ongoing spat, didn't stop when Spencer adjourned the hearing shortly before 10 a.m. PST.
"Contrary to RIM's public stance, we always have and continue to offer RIM a license that fully protects everyone--its customers, carriers and partners," NTP said in a statement released soon after the hearing. "RIM has rejected our efforts, stalled the proceedings and attempted to undermine the process every step of the way."
Balsillie said he was "very, very happy" with the hearing but was not sure when a ruling would emerge from Spencer's chambers. "We look forward to getting this decided. We're comfortable with the contingency plans."
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