IEL / ETM Case Study Series
RESEARCH IN MOTION (RIM) - BLACKBERRY
No. 03/12
Division of Engineering & Technology Management (D-ETM)
Institute of Engineering Leadership (IEL)
Faculty of Engineering
MT5001 - IP Management
Research In Motion (RIM)-BlackBerry
Team Members: Fei Liyuan (A0077576H)
Li Fuyun (HT080049B)
See Siew Hui (A0077625X)
Xue Jiangtao (A0066576R)
i
EXECUTIVE SUMMARY
Research in Motion (RIM) is one the world’s leading designers and manufacturers for
mobile communication market, especially with the focus on BlackBerry smartphones. Under
the rigorous competition in the smartphone market, RIM is slowly losing its market share
mainly ascribed to its stagnancy and lack of innovation. Being innovative, having a single
device with dual profiles (both personal and business use), enhanced security and advanced
OS and apps are four key success factors in smartphone market. As for RIM, they are lack of
focus on customer needs, thus a thorough study or survey on their customer base is
imperative. While technology development may not be done easily, RIM shall also consider
outsourcing some of the key features in the smartphone, such as adopting Android OS instead
of BlackBerry OS. On the other hand, Merger and acquisition is another option that RIM
could think about.
With the increasing awareness of intellectual property and its rights attached to it over
the past years, many companies have adopt the strategy of filing patent applications in areas
in which the company will be investing money in research and development This is in hope
to protect its product once they are in the market and leverage the rights from intellectual
property. RIM has likewise adopted the same strategy and has been dominant in the
smartphone market in terms of its secure line and push mail system. We analyzed here the
areas that RIM’s competitors are focusing which may be a platform for RIM to enhance their
patent portfolio in other areas in the smartphone industry.
IP is very important part of intangible asset of an enterprise. Valuation of IP is
different to other intangible assets. In the report, income-based approach and Market-based
approach are selected to valuate IPs of RIM. With income-based approach, we are trying to
valuate IPs with how much they could generate future cash flow in its reminding life and then
i
discounts the income stream into its net present value. Under market based approach of
intellectual property, we will determine the intellectual property value by comparing the
market prices of the similar properties in third party transactions. After the IP valuation and
some market analysis, strategies proposed to RIM are that the company could try to sell some
of its non-core patents and license out some core patents to non-competitors for more cash
flow.
With elaborating the litigation story between RIM and patent troll NTP, we were
taught that as a technology innovation company, it should always actively seek for
approaches to protect it IPs and avoid infringement, ways like to perform comprehensive
prior air or patent searching before any new technology launching or to join another patent
troll to cover its weak IPs. Preventative actions for RIM are also suggested from us to avoid
IP litigation, such as more investment in technology researching and merging small
enterprises to acquire necessary IPs which increase patent portfolio of the company.
ii
TABLE OF CONTENTS
EXECUTIVE SUMMARY .......................................................................................................... i
TABLE OF CONTENTS ........................................................................................................... iii
LIST OF FIGURES ..................................................................................................................... v
LIST OF TABLES ...................................................................................................................... vi
CHAPTER 1 INTRODUCTION ................................................................................................. 1
1.1. About Research In Motion (RIM) ................................................................................. 1
1.2. About Balckberry ........................................................................................................... 3
CHAPTER 2 ANALYSIS OF THE MARKET ENVIRONMENT ......................................... 5
2.1. Competitive Analysis of the Smartphone Market and RIM ........................................... 5
2.2. SWOT Analysis of RIM ................................................................................................ 7
2.3. Key Success Factors in the Smartphone Market ....................... 錯誤! 尚未定義書籤。
CHAPTER 3 ASSESSMENT OF THE PATENT LANDSCAPE OF RIM ......................... 12
3.1. The Rise of Smartphones ......................................................... 錯誤! 尚未定義書籤。2
3.2. The Role of Patens in Smartphone technologies ...................... 錯誤! 尚未定義書籤。2
3.3. Patent Portfolio of RIM ........................................................... 錯誤! 尚未定義書籤。3
3.4. Quality Patents of RIM ............................................................ 錯誤! 尚未定義書籤。6
3.5. Competitors Patents Analysis .................................................. 錯誤! 尚未定義書籤。8
CHAPTER 4 INTELLECTUAL PROPERTY (IP) VALUATION ...................................... 23
4.1. Market Based Approach .............................................................................................. 23
4.1.1. Market Analysis ............................................................................................... 24
4.1.2. Comparable Market Transaction ...................................................................... 27
4.2. Income Based Approach .............................................................................................. 29
4.2.1. Economic Life .................................................................................................. 30
4.2.2. The Estimated Economic Benefit ..................................................................... 31
4.2.3. Discount Rate ................................................................................................... 32
4.2.4. DCF Method ..................................................................................................... 33
CHAPTER 5 LITIGATION OF IP DISPUTES ..................................................................... 35
5.1. Background .................................................................................................................. 35
5.2. Litigation Process ........................................................................................................ 35
iii
CHAPTER 6 CONCLUSIONS AND RECOMMENDATIONS ........................................... 44
REFERENCES ............................................................................................................................ 46
iv
LIST OF FIGURES
Fig. 1 Illustration of the functions of BlackBerry smartphone ...................................................... 3
Fig. 2 BlackBerry development pipeline and main functions ........................................................ 4
Fig. 3 U.S. smartphone penetraton and projection ......................................................................... 6
Fig. 4 SWOT analysis of RIM ....................................................................................................... 8
Fig. 5 Themescape map of Research In Motion (RIM) generated from Thomson Innovation ... 13
Fig. 6 Themescape map of Research In Motion (RIM) generated from Thomson Innovation
(Main areas of patent protection) ..................................................................................... 14
Fig. 7 Diagram on quality patents of RIM ................................................................................... 16
Fig. 8 Citation map of US1999401868A on push mail technology ............................................. 17
Fig. 9 Citation map of US7,254,712 B2 on secure line technology ............................................ 17
Fig. 10 Citation map of US7,073,964 B2 on keypad housing technology .................................. 17
Fig. 11 Themescape map of the mobile devices technology generated using Thomson
Innovation ........................................................................................................................ 18
Fig. 12 Patent landscape of the mobile devices technology comparing between RIM and
Nokia ................................................................................................................................ 19
Fig. 13 Patent landscape of the mobile devices technology comparing between RIM and
Apple ................................................................................................................................ 20
Fig. 14 Patent landscape of the mobile devices technology comparing between RIM and
Samsung ........................................................................................................................... 21
Fig. 15 Market performance of RIM (2007-2011) ....................................................................... 24
Fig. 16 The latest stock price of RIM (Date 15th Oct 2011) ........................................................ 25
Fig. 17 Annual revenue for RIM (2005-2010) ............................................................................. 31
Fig. 18 Global smartphone shipment (2007-2011) ...................................................................... 32
Fig. 19 List of 5 patents considered infringement by RIM .......................................................... 36
Fig. 20 Front page of patent US5,625,670 ................................................................................... 37
Fig. 21 BlackBerry mail system and NTP patent claim comparison ........................................... 40
v
LIST OF TABLES
Table 1 Growth profile of Research In Motion (RIM) .................................................................. 2
Table 2 Global mobile phone sales in 2010 ................................................................................... 5
Table 3 Worldwide smartphone operating system (OS) market share in 2009-2015 .................... 7
Table 4 Summary of competitors’ patent analysis ....................................................................... 22
Table 5 Calculation of patent value in RIM ................................................................................. 27
Table 6 Guideline for the forecast period .................................................................................... 30
Table 7 IP value by DCF method ................................................................................................ 34
vi
CHAPTER 1 INTRODUCTION
(Li Fuyun)
1.1. About Research In Motion (RIM)
Research in motion (RIM) is one of the world’s leading designers, manufacturers and
marketers of solutions for the mobile communication market. It is found in 1984 with its
headquarters in Waterloo, Ontario of Canada. RIM Provides platforms and solutions for
seamless access to time-sensitive information including email, phone, short message service
(SMS), Internet and intranet-based applications and browsing. Additionally, RIM develops
integrated hardware, software and services that support multiple wireless network standards.
RIM’s portfolio includes the BlackBerry wireless solution, the RIM Wireless Handheld
product line, software development tools and other software and hardware. It was founded by
Mike Lazaridis, who currently serves as its co-CEO along with Jim Balsillie.
Back in 1984, Mike Lazaridis dropped out from the University of Waterloo, backed by
loans from friends and family, he and two friends started RIM. Initially, they were financially
supported by General Motor (GE) for industrial automation. By the late 1980s, RIM had
about $1 million in sales and about a dozen employees. Since the beginning of 1990s, RIM
started to work on wireless connectivity initially on radio modems, then to smart pagers. For
1998, RIM reported revenue of US$21 million and net income of US$400,000. The company
was in good financial shape. Since February 1999, RIM introduced the BlackBerry mobile
specially incorporated corporate e-mail applications. A unique aspect of the BlackBerry was
that it featured a push system for e-mail delivery, whereby e-mail messages were relayed
from the user's personal computer or corporate server to the BlackBerry without having to
dial in. The launch of BlackBerry soon caught a lot of attention in the market. It was a
breakthrough product that combined a phone, pager, e-mail, personal organizer, and web
browser. For 1999, RIM's revenue was more than doubled to US$47.5 million with the Net
1
income of US$6.8 million. After that, RIM continued to add new product features, introduce
new models, and partner with technology providers. The success of BlackBerry resulted of
substantial growth for RIM which is shown in the table below.
Table 1 Growth profile of the Research In Motion (RIM)
Years
Sales
Operating income
Net Income
2002
294,000,000
(58,000,000)
(28,000,000)
2003
307,000,000
(64,000,000)
(149,000,000)
2004
595,000,000
78,000,000
52,000,000
2005
1,350,000,000
386,000,000
206,000,000
2006
2,066,000,000
617,000,000
375,000,000
2007
3,037,000,000
807,000,000
632,000,000
2008
6,009,000,000
1,731,000,000
1,294,000,000
2009
11,065,000,000
2,722,000,000
1,893,000,000
2010
14,953,000,000
3,507,000,000
2,457,000,000
2011
19,907,000,000
4,639,000,000
3,444,000,000
RIM has grown over the years into a highly technology-intensive company. In the
year 2000, its patent portfolio numbered only 16 issued utility patents. But by the end of 2010,
the company had more than 8000 utility and design patents issued by the United States Patent
and Trademark Office (USPTO). RIM maintains an aggressive patenting, licensing and
technology acquisition program. However, RIM has also been embroiled in a series of suits
relating to alleged patent infringement. One of the most well-known cases is the BlackBerry
patent dispute with NTP that caused them to pay $612.5 million to NTP to settle the case.
The detailed Intellectual Properties (IP) dispute with NTP will be discussed and analyzed
thoroughly in the following chapters.
1.2. About BlackBerry
2
As one of the most successful products, BlackBerry is a line of mobile e-mail and
smartphones device that integrated with software that enables access to a variety of data and
communication services. It functions as a combination of personal computer, mobile phone
and personal digital assistant (PDA) (Fig. 1). It allows one to stay in touch with everything
that matters to you while you’re on the go, such as email, phone, maps, organizer,
applications, games, the Internet and more. It is primarily known for their ability to send and
receive internet e-mail whenever mobile network service is present or through Wi-Fi
connectivity without the need for any user intervention.
Fig. 1 Illustration of the functions of BlackBerry smartphone
3
Since the launch of the first generation of BlackBerry in year 1999, RIM has
continuously upgrading the BlackBerry different aspects, such as the navigation system,
applications, displays and features, etc (Fig. 2). By second quarter 2011, BlackBerry occupies
11.7% share of worldwide smartphone sales, making it the fourth most popular device
manufacturer after Google, Nokia and Apple [1]. The BlackBerry internet service is available
in 91 countries worldwide on over 500 mobile service operators using various mobile
technologies. As of October 2011, there are 70 million subscribers worldwide to BlackBerry
[2].
Fig. 2 BlackBerry development pipeline and its main functions
4
CHAPTER 2 ANALYSIS OF THE MARKET ENVIRONMENT
(Li Fuyun)
2.1. Competitive Analysis of the Smartphone Market and RIM
According to mobiThinking [3], there are 5.3 billion mobile subscribers (about 77
percent of the world population) with the strong growth mainly from China and India. The
total global sales of mobile phone (including both feature phones and smartphones) have
reached 1360 million (Table 2). Among all, Nokia and Samsung are still two major suppliers
in mobile phone market with a total occupation of more than 50% market share. Whereas,
both RIM and Apple are relatively small with a less than 5% market share each last year. This
is because these companies are very much focused on smartphone business only. Referring to
the last year’s smartphone sales, Nokia, RIM, Apple and Samsung are a few major players.
Table 2 Global mobile phone sales in 2010 [3]
Top five mobile phone manufacturers by
Top five smartphone manufacturers by
2010 global sales
2010 global sales
Rank Vendor
Unit
Market
Shipments
Rank
Vendor
Unit
Market
Share
Shipments
Share
(Million)
(%)
(Million)
(%)
1
Nokia
453.0
33.3
1
Nokia
100.3
33.1
2
Samsung
280.2
20.6
2
RIM
48.8
16.1
3
LG
116.7
8.6
3
Apple
47.5
15.7
4
RIM
48.8
3.6
4
Samsung 23.0
7.6
5
Apple
47.5
3.5
5
HTC
21.5
7.1
Others
413.8
30.4
Others
61.5
20.3
Total
1360
100
Total
302.6
100
In addition, it is expected that there is a better future for smartphones in comparing to
feature phones. This could be seen from another study done by Nielson (Fig. 3). In the early
5
days (back to year 2008), feature phone dominates most of the mobile phone market and has
almost 90% market penetration in the U.S. alone. However, the demand has dropped
continuously over time, whereas the smartphone penetration has grown steadily over time. It
is expected that the U.S. smartphone penetration will catch up the feature phone by the 3rd
quarter of this year and then excel further in the future.
Fig. 3 U.S. smartphone penetration and projection
Table 3 show another study by Gartner [4], that the worldwide smartphone operating
system (OS) will increase by almost four folds to 631 million in year 2015. In which, we
could see a dramatic increase from Android OS, whereas the Symbian, which is currently
applied in Nokia OS will almost disappear in the market in the near future. In addition, we
would also expect a downturn trend of BlackBerry in the market. Interestingly, the iOS
market from Apple is sort of fluctuating over the long term run and there is not expected
6
growth of Apple in the future even though iPhone has been recognized as one of the hottest
products in the mobile market right now.
Table 3 Worldwide smartphone operating system (OS) market share in 2009-2015 [4]
Worldwide smartphone operating system (OS) market share in 2009-2015
OS adopted
2009
2010
2011
2015
Android
3.9%
22.7%
38.5%
48.8%
BlackBerry
19.9%
16.0%
13.4%
11.1%
iOS
14.4%
15.7%
19.4%
17.2%
Symbian
46.9%
37.6%
19.2%
0.1%
Windows Phone/Mobile
8.7%
4.2%
5.6%
19.5%
Others
6.1%
3.8%
3.9%
3.3%
Total smartphones sold
172 million
297 million
468 million
631 million
In summary, there is a bright future in the smartphone business. However, the
competition in this field has also been very tough over years, especially with the new entrants
like Google and Microsoft. Based on the market analysis and prediction, the market shares of
RIM are expecting to continuously drop over the next five years. Thus, RIM shall make a
change and implement some new measures in order to stay competitive in this market.
2.2. SWOT Analysis of RIM
A strategic evaluation based on SWOT analysis has also been carried out and it is
shown in the Fig. 4 below. The brand of BlackBerry is still considered to be the main strength
in RIM. The use of BlackBerry is still much preferred in the public and business sectors
mainly ascribed to the success in its quality IP in the early days, such as secure line and push
mail features. However, there is generally weak operating system (OS) when compared to
Android or iOS. This could be reflected from two aspects, customization and apps. Both
Android and iOS provide sheer amount of customization whereas BlackBerry not. Aside
7
from changing your wallpaper, assigning apps to your left and right convenience keys and
moving icons around, there's not much else you can do with BlackBerry. Referring to apps
development, Android's market is huge. They have a very large number of apps second only
by iPhone's app Store. On the contrary, the BlackBerry app world is garbage, maybe not
complete crap but it is definitely much, much smaller than Android's market.
Fig. 4 SWOT analysis of RIM
In terms of opportunities in this field, as mentioned earlier, there is expected huge
growth in smartphone market in the near future. RIM should focus on these two areas (e.g.,
OS and apps) to further enhance its product features and develop other categories of mobile
phones. This definitely would further enhance its product popularity and open its market to
other types of consumers. Although there is a continuing growth in the smartphone market,
the competition is getting extremely tough, especially with the entry of Microsoft and Google
8
in this line. Even though it is unclear what impact the newcomers will have on the market,
many enterprises are willing to consider them as valid alternatives to BlackBerry today.
2.3. Key Success Factors in the Smartphone Market
Even though there is still huge potential in the smartphone market growth and benefits
involved, the competition in this market is getting extremely tensed over years. Over years,
one believes that in order to survive, a few key factors have to be carefully considered.
Innovation
Being innovative is one of the key points in the smartphone market. The success of
RIM in the early days is mainly ascribed to the unique features and innovations that
BlackBerry can offer. It caught the customer’s attention by providing the push mails and
secure line services. As time goes by, all other mobile providers are also able to provide those
features in their smartphones. Instead, those mobile providers such as Samsung and Apple
also offer other innovative services and features in their smartphones. For example, the large
number of apps in their mobiles promotes our daily life and enriches our lifestyle.
Additionally, the smart and streamlined external phone design, interface and touch screen
features also attract young generations. Thus, those smartphone providers have overtaken
RIM in the smartphone business. RIM shall further enhance its innovation in creating other
platforms to attract customers.
Dual Profile
Dual profile, by means of having a single device that could serve both personal and
business use, is the trend of future. With the advance in technology, human being tend not to
be restricted working stiffly on the desk and office. And they are loathing to carrying multiple
9
devices if they don’t have to. Devices that can support dual profiles to segregate the personal
and business use would find a welcoming market. Android seems to have taken a step in that
direction by allowing different home screens based on the profile selected, whether it is work
related, social or fun. However, this is very superficial in that it only customizes the apps
available on the home screen. What is needed is true segregation whereby the data is also
protected and also some specific features are enabled based on the profile.
Data Security
In considering the dual profile, the key issues here are to handle large amount of data
efficiently and data security. Enterprises are nervous about allowing users access to its data
while they are away from office or not on a secure network. Devices need to support not
only data encryption, but also ability to connect securely to the enterprise network. Part of
this connectivity is network and enterprise dependent. However, from the device perspective,
data encryption is absolute must. In addition, the remote device management is another key
feature in this area. This goes hand-in-hand with data security. Enterprises want the ability to
manage devices remotely so that they can push updates to the devices to ensure data security
and also be able to remotely wipe the device in case it is lost or stolen. A lot of companies are
working on this for both the Apple and Android platforms; however, they are still in early
stages and have not gained enough traction yet. Whereas in RIM, they have already built up
customers’ confidence in its secure line service, what they need is to further improve in this
area and they should be able to outperform others in the near future.
OS and Apps
As pointed out earlier, a steady OS system is substantial in a mobile device. In this area,
both Apple (i.g., iOS) and Google (i.g., Android) have done very well. The OS they have
gives full touch screen experience. They update constantly and on top of this, software
10
version, different manufacturing companies have freedom to place their own user interface on
top of the original OS. This is especially true for Android. The sheer amount of customization
offered by Android is the clear winner over others. This would allow users to freely place
icons for quick access to apps and widgets. Thus, it could be suited for various customer
needs. On the contrary, BlackBerry does not really provide this kind customization freedom.
App is a big selling point of modern smartphones. In terms of number and variety, one shall
provide large number of apps and different varieties to suit for all kinds of needs. In this area,
again, both Apple and Google have a big advantage over others like RIM. There are plenty
apps by iPhone’s App Store. As a result, iPhone has been one of the most favourite
smartphones in the market for young adults. Therefore, OS and Apps is another key areas to
be considered in order to success in this competitive Smartphone market.
In summary, in the area of innovation, both Apple and Samsung have done quite well
in this area. In terms of developing future smartphones with dual profile, everyone needs to
work harder and currently no one has really emerged to be market leader. Whereas in data
security, this is the area that RIM has been very strong with over years. They shall further
enhance in this aspect and keep up its dominance in the market. As for OS and apps, both
Nokia and RIM shall pay more attention and innovate themselves. This area has been the
biggest advantage in Apple and Samsung.
11
CHAPTER 3 ASSESSMENT OF THE PATENT LANDSCAPE OF RIM
(See Siew Hui)
3.1. The Rise of Smartphones
Smartphones gain its popularity in the early 2000. More than 80 million smartphones
were sold in the third quarter of 2010 alone [5]. Smartphones have changed the way we live,
work, play, communicate and share information with others. Smartphone can be considered
as a all-in-one compact and mobile device which not only act has a phone, but also as a
electronic diary, computer, internet access, video, camera, MP3 player, gaming console and
GPS. Thus, it is not surprising that smartphone sales have grown 96% in the last 12 months
[6].
Smartphones are also changing in scope, with the rise of Apple’s iPad and its
competitors bridging the gap between smartphones and computer. This brings in many new
smartphone features such as touch screens and location sensing applications to mobile
computing.
3.2. The Role of Patents in Smartphone Technologies
Companies file patents to protect their investment in research and development (R&D).
Once examined and granted, a patent provides its owner or licensee with a monopoly to
practice and utilize the patented invention for up to 20 years [7]. Many well-known
heavyweight technology firms including RIM, Apple, Nokia and Samsung are all in the midst
of patent battles relating to smartphone technologies. The question leading to this is – who
has the leading patents?
In order to answer the question, it involves conducting analysis of the patents from the
various big players in the smartphone industry, namely: Apple, Samsung, Nokia and RIM.
12
3.3. Patent Portfolio of RIM
The BlackBerry is a tool for communication in the wireless age. The device allows
communications by wireless phone, SMS, and e-mail that fits in the palms of one’s hands.
The mobility that the BlackBerry allows is greatly prized by its end-users, who include senior
executives at companies and high-ranking government officials [8].
RIM has grown over the years into a highly technology-intensive company. In the year
2000, its patent portfolio numbered only 16 issued utility patents. But by the end of 2007, the
company had more than 400 utility and design patents issued by the United States Patent and
Trademark Office (USPTO). A recent analysis of RIM’s patent portfolio by searching via
assignee/applicant shows that there are now approximately 8286 patent/patent applications
around the world.
Fig. 5 Themescape map of Research In Motion (RIM) generated from Thomson Innovation
As shown above in Fig. 5, RIM has positioned itself over the past 12 years to cover in
various areas of the smartphone technology. RIM’s main patents include keyboard key
arrangement, key encryption and push mail delivery. The filing of the above mentioned main
13
areas of patent protection of RIM is in line with RIM’s BlackBerry product which focuses on
allowing communications by wireless phone, broadband internet, SMS, and e-mail using a
small device that fits in the palms of one’s hands.
The key areas of RIM’s patents relating to keyboard key arrangement, key encryption
and push mail delivery accounts to approximately 2556 of patents/patent applications around
the world.
Keypad
Arrangement
Push mail
Secure
Line
Fig. 6 Themescape map of RIM generated from Thomson Innovation (Main areas of RIM’s
patent protection).
Push e-mail is used to describe e-mail systems, which allows an always-on capability.
This means that new e-mail is actively transferred (pushed) as it arrives by the mail delivery
agent (MDA) (commonly called mail server) to the mail user agent (MUA), also called the email client [9]. Traditional mobile mail clients may transfer new mail at frequent intervals,
14
with or without downloading the mail to the client, thus providing a similar user experience
as push e-mail. In contrast to traditional e-mail, most of the protocols used in popular current
systems are proprietary; for example, BlackBerry uses its own private protocols developed by
RIM.
In addition, secure line launched for RIM’s BlackBerry smartphones, allows end-toend real-time encryption to prevent private conversations from being compromised, enabling
individuals within corporations and governments to converse in a secure manner without the
need for specialized equipment or the expense of new infrastructure. In 2009, BlackBerry
launched Cellcrypt Mobile, a secure mobile voice calling application, which was approved by
governments and corporations [10].
Instead of traditional telephone keypads where the user must execute additional step
to dial a number containing convenience letters, BlackBerry smartphones have full keyboards.
In the most recent improvement, BlackBerry will be getting a touchscreen upgrade. The
phone retains the trademark BlackBerry keyboard arrangement, making for a unique merger
between touchscreen functionality and physical keyboard input [11].
15
3.4. Quality Patents of RIM
Push mail
US1999401868A
An electronic mail communication
system which may include
a mobile wireless communication
device, a wireless communications
network connected to the internet,
and an Internet Service Provider(ISP)
server connected to the Internet for
receiving email for a given user.
Secure Line
US 7,254,712 B2
A system and method for
pre-processing encrypted
and/or signed message at
a host system before the
message is transmitted to a
wireless mobile communication
Device.
Keypad Arrangement
US US7073964B2
The keyboard has a set of keys (10-25)
and corresponding indicia including keys
associated with alphabetic characters
Fig. 7 Diagram on quality patents of RIM
Next, we look at quality patents in the various areas of push mail, secure line and
keyboard arrangement. We refer these as quality patents based on the field of the
patent/patent applications that they are in and their forward and backward citation by others.
Backward citations refers to citations to patents which are "backward in time" from the
current patent of interest. Forward citations refers to citation to patents which are "forward in
time" from the current patent of interest. We see that in Fig. 8, 9 and 10 below, the three
patents were heavily cited by others as well as citing others. This shows that the three patents
from RIM have leverage from other patents and are an improvement over existing technology.
Others, on the other hand, had view the patent application to be worthy enough to make
improvements on it. In addition, the forward citations made to the quality patents of RIM are
as recent as in 2011. Thus showing that the technology in the quality patents in Fig. 7 is of
current technology.
16
Fig.8 Citation map of US1999401868A on push mail technology
Fig. 9 Citation map of US 7,254,712 B2 on secure line technology
Fig. 10 Citation map of US 7,0739,64 B2 on keypad housing technology
17
3.5. Competitors Patent Analysis
Software
design
Hardware
design
User interface
Fig. 11 Patent landscape of the mobile devices technology generated using Thomson
Innovation
We analysed the patent landscape of the mobile devices technology by searching with
keywords pertaining to “mobile devices”. We generated a themescape map through Thomson
Innovation to provide us with a holistic view of the patent landscape. Referring to Fig. 11, we
grouped the patent applications in the field of mobile device technology into three categories.
The three categories are software design, hardware design and user interface.
18
Software application
(Push mail)
Hardware design
(Decoding
video)
User interface
Fig. 12 Patent landscape of the mobile devices technology comparing between RIM and
Nokia
Patent and patent applications from RIM are denoted in red dots while its competitors
(e.g. Nokia, Apple and Samsung) are denoted in green. First, referring to Fig. 12, we compare
the patent landscape of Nokia and RIM. RIM focused more patent applications in the area of
software design as compared to Nokia which has focused its patent applications mostly in the
area of user interface. Both RIM and Nokia have focused its patent portfolio in the area of
hardware design.
19
Software application
(Push mail)
User interface
Hardware Design
(Wireless
device)
Fig. 13 Patent landscape of the mobile devices technology comparing between RIM and
Apple
Next, we compare the patent landscape of Apple and RIM by referring to Fig 13. RIM
focused more patent applications in the area of software design and hardware design as
compared to Apple, which has focused its patent applications mostly in the area of user
interface.
20
Software application
(Push mail)
Hardware design
(Memory
cell program)
User interface
Fig. 14 Patent landscape of the mobile devices technology comparing between RIM and
Samsung
We also compare the patent landscape of Samsung and RIM by referring to Fig. 14.
RIM focused more patent applications in the area of software design as compared to Samsung
which has focused its patent applications mostly in the area of hardware design. Both RIM
and Samsung have focused its patent portfolio in the area of user interface.
21
Table 4 Summary competitors’ patent analysis
In conclusion, we summarized that RIM has a stronger patent portfolio in software
application and hardware design whereas Nokia and Samsung are stronger in its patent
portfolio in the areas of hardware design. Apple on the other hand, emphasized more in the
user interface. From this analysis, we are able to see the strength and weakness of the various
players in the smartphone industry. Thus, in the instance where RIM would like to compete
with Apple, it would be advisable for RIM to build up its patent portfolio in the area of user
interface. The same principle would also apply to RIM in instances where the competitors are
Nokia or Samsung.
22
CHAPTER 4 INTELLECTUAL PROPERTY (IP) VALUATION
(Xue Jiangtao)
Intangibles of a business are all assets that are neither physical nor financial objects;
such assets include marketing intangibles such as trademarks and trade names, as well as
intellectual property such as patent. Intellectual Property is the subset of intangibles that can
be owned by an enterprise, and includes patents, copyrighted documents, trademarks, as well
as documents, software, and related knowledge covered by trade secrets. It is a specialized
classification of intangible assets. Because of their special status, intellectual properties enjoy
special legal recognition and protection. Unlike many of the other assets in company’s
balance sheet, the intangible assets (Eg: Patent, trademarks) are among most difficult to
determine its value. The Value of IP is much different to determine, Valuation process is also
much difficult than the value of any other assets. IP is creation of Human mind but to know
the value or to trade that property we have to “value” them.
There are three main approaches used for Valuation of Intellectual Property:
1. Cost-based Approach (we won’t discuss this approach in this report.)
2. Income-based Approach
3. Market-based Approah
4.1. Market Based Approach
According to economic theory, the value of an asset is best determined by the market,
in the form of a transaction between two unrelated entities dealing at arm’s length.
Unfortunately, intangible assets and IP that will eventually support products seldom benefit
from open market conditions, either due to novelty or secrecy factors. In consideration of the
growing investments required to develop and market products, there is a growing need for
assessing the economic value of such IP as early as possible in the product development cycle.
23
Value assessment is not an accounting operation but rather an attempt to reconcile
information pertaining to a given IP or business project, such as development costs,
expectation of income, comparative advantages and market data, for the purpose of making
better strategic decisions.
Under market based approach of intellectual property, we will determine the
intellectual property value by comparing the market prices of the similar properties in third
party transactions. The keys to apply the market valuation approach are using market
capitalization method Comparable valuation method or market transaction method.
4.1.1. Market Analysis
This approach is used for companies which are listed in the stock exchanges. One of
the important rules to apply market analysis is to capture the latest market information.
Fig. 15 Market performance for RIM (2007 – 2011)
24
Fig. 16 The latest stock price for RIM (Date 15th Oct 2011)
Generally, the elements of business enterprise value can be calculated by using below
formula:
Working Capital
BUSINESS
Other Tangible Assets
ENTERPRISE
=
GOING-CONCERN
Intangible Assets
VALUE
Intellectual Property
Where:

Working Capital is the excess of an enterprise’s current assets (cash, short-term
investments, accounts receivable, inventories, prepaid expenses, etc.) over its current
liabilities (trade accounts payable, current portion of long-term debt, income taxes,
withholding taxes, accrued liabilities, etc.).
25

Other Tangible Assets comprise plant, machinery and equipment, land and buildings,
office furniture and equipment, computers, vehicles, etc.

Intangible Assets include goodwill such as customer loyalty, organized work force,
employee and bank relationships, favorable contracts, etc.

Intellectual Property includes patents, copyrights, trademarks, trade secrets,
proprietary technology, etc.
The market capitalization of RIM is calculated by the total number of shares multiply the
price per share. As the market status in 15th Oct 2011, RIM has total stock 524 Million shares,
with each share at price 22.27 USD, thus , we can easy calculate RIM’s market worth is
11.67 million.
From last year’s annual report and quarterly financial report, we can calculate RIM’s net
tangible asset is around 6.9 billion. From the balance sheet of the company the book value of
all the total tangible assets are subtracted from the total liabilities and net tangible assets are
calculated:
Net Tangible Assets (N) = Total Tangible Assets – Total Liabilities
The intangible assets value then can be determined, from RIM’s annual report, we can
find that the value of patent contributes to about 41% of the total intangible asset, which is in
fact calculated as 1.9 billion as indicated in the table below.
26
Table 5 Calculation of patent value in RIM
Total Issued Share Capital
524 (Million)
Share Price
22.27 USD
Total Market Capitalization
11.67(Billion)
Net Tangible Assets(2011 Feb)
6.9 (Billion)
Intangible Assets *
4.7(Billion)
Patent Value (*41%)
1.9 (Billion)
4.1.2. Comparable Market Transaction
We have two recent comparable transactions recently; one of them is Nortel networks.
Nortel, a multinational telecommunications equipment manufacturer headquartered in
Toronto, filed for bankruptcy in January 2009. The patents and patent application is the last
major asset of Nortel, encompassing technologies such as wireless, wireless 4G, data
networking, optical, voice, Internet, and semiconductors.
Google had previously gained approval from the US Department of Justice (DoJ) to
move ahead with its $900 million bid for Nortel patents. Having its own patent portfolio will
allow Google to defend itself from patent litigation and will allow it to file counterclaims
against its rivals. Like in the case of HTC, Apple won a ruling on July 15 in the U.S.
International Trade Commission that HTC's Android-based mobile phones infringe two
Apple’s patents. Apple was asking the agency to block the importation of HTC phones in the
U.S. due to the violations. However, by buying S3 Graphics Co., for $300 million, HTC was
able to win victory in the ITC that said that Apple's Mac OS X system was violating patents
held by S3. In the event Apple pursues a ban of HTC phones, HTC can pursue a ban of Mac
OS X. HTC thus has its bargaining chip in settlement talks with Apple. However, the major
phone makers want to stop Google goes into the Smartphone markets. The group of
27
companies, which includes Apple, Research in Motion, Sony, Ericsson and EMC, beat
out Google and Intel for the patents and patent applications that Nortel had accumulated
when it was still one of the largest telecommunications equipment makers in North America.
The 6000 patent was valued 1.5 billion by the intellectual property specialist, and the final
price reach 4.5 billion, which is 200% more than the estimated value.
In August 2011, Google paid $40 a share in cash for Motorola mobile– a 63 percent
premium to the closing share price. Larry Page, Google's chief executive, said the deal would
"supercharge" its Android operating system and help to extend it into areas other than
smartphones. If we study the background carefully, we might find the reason why Google is
willing to spend so much on Motorola mobile, this acquisition, and Nortel’s patent auction,
both has many key patent in telecommunication industry, this deal is really about Google
gaining ownership of Motorola's 17,000 patents and 7,500 pending patents – a massive
armory it can use to defend the mobile phone producers using its Android operating system
against a steady stream of legal battles over infringements of intellectual property.
This is a clear sign that the search giant intends to go head-to-head with Apple as a
provider of complete mobile systems, chiefly Android-based smartphones and tablets that
feature tight integration of hardware and software. Also in Google's crosshairs: Microsoft and
its partner Nokia, and RIM. Google strengthens their defensive position through the
acquisition of almost 21,000 patents, including those 7,000 that are presently pending. The
acquisition of the Motorola patent portfolio provides Google with some heavy artillery to
combat competitive claims. Without a trove of patents to leverage, Google has not been in a
position to nullify competitive threats by claiming patent infringement against the originating
complainant, and ultimately settling on a cross-licensing arrangement. The Motorola
Mobility acquisition changes all of that.
28
From the above two transactions, we can estimate RIM’s patent will worth much more
than its book value 1.9 billion, if we use the above two transactions as the benchmark, the
estimate price will range between 3 million to 5.7 million.
4.2.
Income Based Approach
Income approach also called as Economic Benefits Valuation and “Discounted Cash
Flow Analysis”. Under this method the value of an intangible asset is estimated which is
based on the expected income attributable to the intangible asset during its remaining
economic life. The value of an asset is considered to be the sum of the present value of the
future cash flows that can be generated as of the day of valuation (Discounted Cash Flow)
from the use of the intangible asset within the expected economic useful life and possibly its
disposal. The central tasks within a valuation are therefore the prognosis of the cash flows
relevant for the valuation and the determination of the capitalization interest
rate/capitalization cost rate depicting the risk of the concerned intangible asset.
The key successful factor in this valuation method is isolating the specific cash flows
that can be credited to the asset to be evaluated. These cash flows are a type of added value to
the cash flows that could be generated without the intellectual property assets. As with all
income valuations the need to accurately forecast future cash flow is of paramount
importance. The following variables are needed when using an income approach:

An income stream either from product sales or licensure of the patent

An estimate of the duration of the patent’s useful life

An understanding of patent specific risk factors and incorporating those into the
valuation

A discount rate
29
The value of IP lies in its ability to generate future cash flows for its owner. The
income approach projects an asset’s income over its remaining useful life and discounts the
income stream to its net present value.
4.2.1. Economic Life
The key component is remaining useful life of the Patent. IP assets generate income
over a finite period. Determining IP’s remaining useful life is a function of several factors,
including age, legal protection, contractual rights, physical obsolescence, life cycle and
competition. In our process to estimate the useful life of RIM’s patent, we assume 5 years
patent usage life. This is because Research in motion is a solid company, although it is not
dominant in the smartphone market.
Table 6 Guidelines for the forecast period
Company Competitive Position
Excess Return/Forecast Period
Slow-growing company; operates in highly competitive,
1 year
low margin industry
Solid company; operates with advantage such as strong
5 years
marketing channels, recognizable brand name, or
regulatory advantage
Outstanding growth company; operates with very high
10 years
barriers to entry, dominant market position or prospects
4.2.2. The Estimated Economic Benefit
Another important aspect is the project income. To estimate future income, valuators
may extrapolate historic earnings trends using statistical analysis. By looking at the latest
annual report, the latest quarter’s financial report, as well as the product sells trends, the
30
Intellectual property valuators perform their own analyses or rely on management’s income
projections.
Fig. 17 Annual revenue for RIM (2005 to 2010)
From RIM’s annual report, we can find out rim’s annual income reach 20 billion USD
in year 2010. From the latest statics of the global Smartphone shipment, we can find there is a
turning point exists for RIM’s smartphone shipment number. In our valuation, we will make
an assumption that RIM’s revenue will be 10% decrees yearly.
31
Global Smartphone Shipment(2007-2011)
Fig. 18 Global smartphone shipment (2007-2011)
The financial income contribute by patent can be calculate by the 25 percent rule, Using
the 25 percent rule, a royalty rate is established between 25 percent and 33 percent of
operating profit, adjusted upward or downward based on consideration of various factors
among the patent holder and the infringer. This general “rule of thumb” has been accepted in
courts and often is utilized as a starting point or general frame of reference for the
“hypothetical negotiation.”
4.2.3. Discount Rate
A further component is the discount rate. In addition to matching the discount rate with
the appropriate measure of economic income, discount rates should be commensurate with
the risk of the IP asset. Riskier IP assets warrant higher investor returns. In turn, higher
discount rates equate with lower IP values. In our analysis, RIM was category into the four
stage “Growth and venture”, and the discount rate of 25 percent was applied. The discounted
cash flow approach attempts to determine the value of the IP by computing the present value
32
of cash flows, attributable to that piece of IP, over the useful life of the asset. Unlike an
enterprise DCF valuation, terminal values are rarely used, as the useful life of a patent is
typically a finite period of time.
4.2.4. DCF Method
The discounted cash flow method determine the value of the IP by calculating present
value of cash flows, attributable to that piece of IP, over the useful life of the asset. Unlike an
enterprise DCF valuation, terminal values are rarely used, as the useful life of a patent is
typically a finite period of time.
The benefits of the DCF method are its ability to compare values among different
patents, by using the required inputs from the firm’s financial statements and market
information. A drawback of DCF is that it does not capture the unique independent risks
associated with patents. All risks are lumped together and are assumed to be appropriately
adjusted for in the discount rate and the probability of success, rather than being broken out
and dealt with individually.
In our analysis, we will assume the patent have no value after 5 years validation time,
however, in the real life case, the patent are validate for 20 years, and some patent still have
value to the product by contributing the “name brand”. After we made all the assumptions,
the present value of future cash flows can be calculated using the below formula:
33
Table 7 IP valuation by DCF method
Forecast Year
2011
2012
2013
2014
2015
20,000
18000
16200
14580
13122
Net Income (After Tax)
3411
3069.9
2762.9
2486.6
2238
Patent Contribution (%)
25%
25%
25%
25%
25%
Paten Economic Benefit
852.75
767.48
690.73
621.65
559.5
Discount Ratio
25%
25%
25%
25%
25%
Value (DCF)
682.2
491.18
353.65
254.63
183.3
BlackBerry Revenue
Patent Net Present value
1,965
(million)
34
CHAPTER 5 LITIGATION OF IP DISPUTES
(Fei Liyuan)
5.1. Background
RIM has grown over the years into a highly technology-intensive company. In the year
2000, its patent portfolio numbered only 16 issued utility patents. But by the end of 2007, the
company had more than 400 utility and design patents issued by the United States Patent and
Trademark Office (USPTO). RIM maintains an aggressive patenting, licensing and
technology acquisition program. With the breakthrough product – BlackBerry, RIM has
achieved a great market success. At the same time, IP litigation around this product and
service has never stopped. RIM has gone through rounds of dispute with other companies in
the past decade and the most critical one is with NTP.
NTP is a patent holding company formed in Arlington, Virginia, in 1992 to manage
the patent portfolio of Thomas Campana, Jr. Since his childhood, Mr. Campana had created
electronic inventions. He built a company around his innovations in the early 1970s. In the
1980s he focused on wireless pager technology and received around 50 patents for these
inventions. However, his company collapsed into bankruptcy in 1991. Mr. Campana
partnered with Donald Stout, a Washington DC lawyer and partner in the intellectual property
law firm Antonelli, Terry, Stout & Kraus, to create NTP as a vehicle to manage his patent
portfolio. Mr. Campana continued to invent and file patents through the 1990s. NTP had no
intention or capability to practice his patented inventions. It simply sought royalties through
licensing. Its legal team was paid a flat rate plus contingency fees. NTP is a private company
with around 20 investors.
5.2.
Litigation Process
35
In 2000, Mr. Campana and Mr. Stout sent a letter to RIM, informing that they were
infringing on NTP’s patents and requesting to license NTP’s technology. RIM never
acknowledged receipt of the letter since, upon an internal review, RIM concluded that they
were not infringing and no response was necessary. However, this decision resulted in a legal
process that threatened the existence of RIM and BlackBerry. In November, 2001, NTP filed
a complaint in US courts that BlackBerry infringed on their patent rights based on the
wireless electronic delivery of mail. During the time of this legal process, RIM continued
with business as usual, experienced a 33% growth in revenues, nearly doubled the number of
BlackBerry subscribers, and aggressively out-licensed its software to developers of
complementary technologies. RIM acknowledged the NTP lawsuit by reporting the complaint
in their 2002 financial statements but treated the NTP’s complaint as to be unsubstantiated,
referring to the infringement case as the “NTP matter”. Meanwhile, RIM asked the US Patent
and Trademark Office (USPTO) for a reexamination of the eight patents issued in the
infringement case, questioning their validity. After a jury trial of the NTP infringement suit in
the second half of 2002, five of the original eight patents were considered (Fig. 19).
36
Fig. 19 List of 5 patents considered infringement by RIM
The front page of the first patent listed in picture above is shown below in Fig. 20.
37
Fig. 20 Front page of patent US 5,625,670
38
The main claims of this patent are:
1.
A system for transmitting information from one of a plurality of originating processors
contained in an electronic mail system to at least one of a plurality of destination
processors contained in an electronic mail system with the information including
originated information originating from one of the plurality of originating processors
and being transmitted by an RF information transmission network to at least one of the
plurality of destination processors and other originated information originating from
one of the originating processors is transmitted with the electronic mail system without
using the RF information transmission network to at least one of the destination
processors comprising: at least one interface, one of the at least one interface
connecting the electronic mail system containing the plurality of originating processors
to the RF information transmission network; and wherein the originated information is
transmitted in association with an address of the one interface from the one of the
plurality of originating processors to the one interface with the electronic mail system
responding to the address of the one interface to direct the originated information from
the one of the plurality of originating processors to the one interface; and the originated
information is transmitted from the one of the at least one interface to the RF
information transmission network with an address of the at least one of the plurality of
destination processors to receive the originated information being added at the
originating processor originating the originated information, or by either the electronic
mail system that contains the plurality of originating processors or the one interface.
2.
A system in accordance with claim 1 wherein: The electronic mail system containing
the plurality of destination processors is the same electronic mail system containing the
plurality of originating processors.
39
3.
A system in accordance with claim 1 wherein: The electronic mail system containing
the plurality of destination processors is a different electronic mail system than the
electronic mail system containing the plurality of originating processors.
4.
A system in accordance with claim 1 wherein the RF information network comprises: at
least one RF receiver, each RF receiver transferring the originated information to a
different one of the plurality of destination processors.
So how BlackBerry system is infringing those claims in this patent?
Top left image in Fig. 21 shows current BlackBerry system. It uses wireless mail user
agent devices and a BlackBerry internet solution server attached to a traditional e-mail
system. The BlackBerry solution server monitors the e-mail server, and when it sees new email for a BlackBerry user, it retrieves (pulls) a copy and then pushes it to the BlackBerry
handheld device over the wireless network. The sender PC in BlackBerry mail system could
be considered as one type of the originating processor in the NTP patent claim, network and
BlackBerry solution server could be considered as one type of the interface and RF
information transmission network, while the receiver – BlackBerry handheld device over the
wireless network could be considered as one type of the originating processor in the claim.
There are the justifications that NTP is suing RIM for patent infringement.
40
Fig. 21 BlackBerry mail system and NTP patent claim comparison
In the defense of RIM, a prior art device was demonstrated in the courtroom.
However, it was determined that the device for demonstration was not prior art since it has
used newer technology. The Judge ordered the jury to disregard the demonstration and a
deception was ruled. In November, 2002, a verdict was reached in favor of NTP. RIM was
charged as “willful infringement” and the Judge ordered additional damages for the deception
during the trial. RIM owed NTP $53 million. Most importantly, an injunction was issued to
prevent RIM from further making or selling BlackBerry products and discontinuing service in
the USA until RIM placed $20 million in escrow. RIM might not survive with such
injunction since USA represented the largest share of the BlackBerry market. In RIM’s 2003
annual report, it was the first time for the company to include an expense line item for
‘Litigation’, indicating RIM’s current and future expected costs for the ongoing legal fight. A
few months after the November, 2002 ruling, the USPTO reexamined the NTP patents and
found that there is prior art not considered in the earlier trial, which raised concerns about
41
patentability of NTP’s claims. However, in May of 2003, enhanced compensatory damages
and plaintiff’s attorney fees were ruled by the United States District Court, which ordered
RIM to pay NTP $57.3 million in damages for willful infringement and granted an injunction
against the further sales of BlackBerry products, as well as discontinuing service in the USA.
This ruling included an increase in the assumed royalty rate from 5.7% to 8.55%, and
required ongoing quarterly royalty payments. The injunction was stayed pending because of
an appeal made by RIM to the Court of Appeals for the Federal Circuit.
At the end of 2004, the Court of Appeals for the Federal Circuit made a ruling that US
patent law covers cases where the infringers are located abroad when the “control and
beneficial use” is located within the USA. RIM filed a motion for rehearing with judges only.
In March of 2005 a settlement was announced. It was reported that RIM would pay NTP
$450 million. This amount included a fully paid-up license, and legal fees as well as damages.
There would be no ongoing royalties. RIM recorded the acquisition of the license from NTP
as an intangible asset valued at $20 million. However, the negotiations were not completed
and the two parties reached an impasse. RIM took court action to enforce the terms of the
settlement.
In 2005, BlackBerry users numbered more than 3 million. Many of the users were
politicians, government employees, emergency service workers and others that relied heavily
on their BlackBerry devices for communications. It was noted that during the events of
September 11, 2001, when cell phones and other devices failed, BlackBerry devices
continued to operate. This versatility and reliance on the BlackBerry prompted the Justice
Department to file a legal brief requesting the Federal Court to delay any shutdown that
would prevent state and federal government workers from using the devices.
In their efforts to invalidate the NTP patents RIM conducted an extensive search for
prior art. In June, RIM sent a letter to NTP announcing that they had discovered, in
42
Trondheim, Norway, a set of technical manuals published by a Norwegian telecom company,
Telenor. These documents described a wireless device for e-mail messaging. The manuals
were published between 1986 and 1989, before the 1991 filing date of the first of the litigated
patents and before Mr. Campana’s admitted invention period of July 1990. This
announcement cast doubt on the validity of the claims of the NTP patents. However, the
USPTO still had to examine this prior art and make a ruling. After an examination of this
prior art in the Norway library, it was not considered by the court as it was not meeting the
criteria of prior art which must be sufficiently publically accessible. On November 30, 2005,
the Court ruled that the settlement reached in March of that year, still under negotiation, was
unenforceable. According to the Court’s decision, “The Court finds the parties do not have a
valid and enforceable settlement agreement. In accordance with the Memorandum Opinion
submitted by the Court under seal, RIM’s Motion to Enforce the Parties’ Settlement
Agreement is DENIED.” This was bad news for RIM. The company was feeling pressure
from some industry analysts to settle the case fearing that the final costs order might reach
more than $1 billion. RIM wrote-off the license with NTP recording an expense of $18.3
million after amortization. RIM appealed to the US Supreme Court. The Justices refused to
hear the case, denying the petition for a writ of certiorari with no opinion given. The lower
court ruling would stand. BlackBerry faced a complete shutdown in the USA. Meaning while,
the US Department of Defense filed a brief stating that, due to the large number of
government workers using BlackBerry products and services, it was crucial for national
security to keep the system operational. At the same time, RIM announced that they had
engineered a work-around for the NTP patents and it would be implemented if the Court
ordered a shutdown of the BlackBerry service.
Less than a month later, on Friday the 3rd of March, 2006, RIM and NTP announced
they had reached a final settlement to the patent dispute. RIM paid NTP $612.5 million. This
43
settlement included a perpetual, paid-up license, as well as legal fees and damages. The
settlement covered all patents owned and controlled by NTP. It also granted RIM unfettered
rights to continue all business, including BlackBerry operations, and dropped any claim
against RIM’s channel partners, suppliers, and customers in relation to RIM products or
services. RIM recorded the acquisition of an intangible asset, the NTP license, valued at $20
million. The litigation against RIM by NTP was dismissed, ending the legal battle. Wall
Street reaction was very positive as RIM was able to continue its business and provide those
premium services as usual which are very critical to certain government sectors and
industries.
44
CHAPTER 6 CONCLUSIONS AND RECOMMENDATIONS
From the research and analysis we did in past three month, we noticed RIM’s market
value has deducted significantly. At the same time, the management team seems have no
good weapon to fight with iOS and Android. With the study of IP management, we would
like to recommend a few possible solutions to RIM:

Make best use of its strength, secure line and push mails services are one of a few most
important patents that BlackBerry phone were widely accepted by enterprise. As RIM
still has strong network relationship with government and multi-national enterprises,
further strength this relationship and expand the business in Secure Email service will
bring additional revenue to RIM.

To invest more money on its core IP and technology or to merge small enterprise for
patents to protect its weak IP areas, this would be helpful to fight against litigation and
protect its IP portfolio.

RIM could consider joining patent troll to share patent across and protect its weak IP.
This would avoid cases like litigation with NTP which results in a severe loss.

RIM should has a special team or partner with IP consulting agency to perform a
comprehensive prior art or patent search before any technology launching, this also
would prevent patent infringement issue from happening again.

Consider licensing out some of the patents to non-competitor is also a possible way to
do it. The main purpose for this approach is to create additional value for RIM’s patent
in other industry, thus, increase RIM’s income. For example, RIM’s keyboard design
has attracted plenty of customers. If RIM license out this design to the wireless mini
keyboard manufactures, additional income can be generated.
45

Merger and acquisition is another option that RIM shall think of. RIM's share price has
fallen 48 percent this year, and it is losing market share in the U.S. to Apple's iPhone
and smartphones running with Google's Android platform. Partly in response, RIM cut
2,000 jobs and promised to streamline its operations. However, simply cut some of the
positions won’t help RIM to expand their business. Think from shareholder’s point of
view, value maximization process that possibly includes selling RIM is definitely
worthwhile to pursue.
46
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47
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Wehner.
(http://news.yahoo.com/blogs/technology-blog/BlackBerry-bold-gets-
touchscreen-makeover-retains-physical-keyboard-220132387.html).
[12] Guideline
for
patent
forcast
reference
period:
http://www.investopedia.com/university/dcf/dcf1.asp#ixzz1WDleK81s
[13] Method
for
intellectual
property
valuation,
university
of
Virginia.
http://faculty.darden.virginia.edu/chaplinskys/PEPortal/Documents/IP%20Valuation%2
0F-1401%20_watermark_.pdf
[14] RIM’s annual report 2009, 2010,2011
48