RIM's shutdown antidote could be painful, but switching providers could be, too

On Feb. 24, James Spencer will have Research in Motion's fate in his hands. The federal judge overseeing the intellectual property battle between NTP and RIM will not only deliberate over whether to re-impose an injunction that could shut down RIM's popular BlackBerry wireless e-mail service in the U.S., he also will consider whether RIM can use a software “workaround.” The software supposedly skirts the intellectual property in question, thus sparing its millions of customers a complete loss of service.

This workaround has gotten a lot of attention, but no one is really quite sure what it is. RIM isn't giving any details, except to say it would require a new software upload to its customers' BlackBerry hand-held devices and possible reconfiguration of IT software. Competitors, analysts and bloggers all have their own ideas: It could be a change in what defines an e-mail or a complete overhaul of the software that fundamentally alters the way RIM delivers data over the wireless network.

RIM's making clear the workaround isn't a simple bluff — the moment an injunction is imposed, it is prepared for a mass-scale overhaul of its network.

“RIM believes that existing customers would be entitled to continuing service and that any injunction, if granted, should only apply to new devices being sold,” Mark Guibert, RIM vice president of corporate marketing, said in an e-mail. “In the event of an injunction barring the sale of RIM's current product designs, RIM would pre-load the new software workaround on devices. Workarounds are a legitimate strategy respected by the courts, so RIM would be fully entitled to alter its software with a non-infringing workaround and continue shipping.”

Guibert added if the court re-imposes the injunction, RIM would likely get a grace period, giving customers time to upgrade to the new software. NTP has suggested a grace period of 30 days, but Guibert said RIM would argue for a longer time span.

Analyst Iain Gillott, however, said installing new software on the networks and BlackBerrys of RIM's U.S. customers is far easier said than done. Downloading and reconfiguring new software and reconnecting to the network takes more effort than most BlackBerry users are willing to attempt. Plus, if RIM changes the functions, feature set or user interface of the standard service, it could have a revolt on its hands.

“Though RIM would like to believe otherwise, people don't love the devices; they love the service,” Gillott said. “If they do anything to change that service, they'll have a problem.”

RIM's competitors for the last year have jumped into the gap to take on customers scared by the RIM/NTP battle. The recent threat of a complete service shutdown has made those defections far greater, giving RIM no choice but to develop a software alternative. Terry Austin, Good Technology's vice president of worldwide marketing and sales, said that in the last few months, more than 1000 companies have contacted Good, inquiring about or purchasing its GoodLink solution.

However, switching from RIM's service isn't easy, either. RIM and its carrier partners have contracts in place, and even if those contracts expire or are canceled, the investment businesses have made in RIM's proprietary e-mail infrastructure and devices won't transfer to another vendor's platform. A new service requires new IT software, and RIM's pricey hand-helds are reduced to mere phones. One advantage other e-mail solutions have is open support for other platforms — Good's solution works over multiple phone operating systems, and Visto has developed a Java client that could be loaded onto any high-end feature phone. But the costs of such a transition are still prohibitively high. J. Gold Associates estimated that an enterprise with 1000 BlackBerry users would incur costs of $845,000 to replace its stock of hand-helds with smartphones and trade out IT software.

So even if enterprises want to avoid RIM's legal troubles, they may wait for the court decision and opt for RIM's workaround out of sheer financial necessity. But how much of a stopgap will the workaround be? It could be a mere Band-Aid over massive blood loss — or worse, it could be a solution that infringes on other companies', beside NTP's, patents.

“If they had a fool-proof solution, they would have shipped it and put this litigation behind them,” said Jill Stelfox, CEO of Defywire. If RIM has developed a solution that takes its network operations center out of the equation, directing e-mail from the enterprise server to the hand-held, it might skirt NTP's patents, but it could then be infringing on a host of patents developed by other providers. “There are a lot of people in this space,” Stelfox said. “RIM has to tread very lightly.”

RIM TIMELINE

November 2001

NTP sues Research In Motion, alleging patent infringement.

November 2002

Jury rules in favor of NTP.

August 2003

U.S. Circuit Court judge allows injunction to proceed.

September 2005

U.S. Patent and Trademark Office rejects NTP patents at heart of case, says they shouldn't have been awarded.

December 2005

U.S. District Court judge lets NTP injunction against RIM proceed.

January 2006

U.S. Supreme Court declines to hear RIM/NTP case.

February 2006

U.S. District Court judge on Feb. 24 will consider viability of RIM's workaround, possible re-imposition of injunction.