RIM Loses $147M in Mformation Patent Dispute

As if RIM needed a good kick while it was down, MDM company Mformation has delivered a blow to the ailing handset maker. At the end of June, it was revealed that RIM had lost over half a billion in net revenue, and now, RIM is losing another $147.2 million over a court-battled patent dispute that’s been ruled in Mformation’s favor.

Mformation, which provides an MDM backbone for many wireless carriers and large enterprises, called into question BlackBerry Enterprise Server, RIM’s BlackBerry mobile management software. According to the MDM company, RIM had been infringing on Mformation patents with the software suite. Officially, Mformation attests it “created the mobile device management category in the late 1990′s” and its patents were in existence long before RIM had MDM ambitions. Rakesh Kushwaha, Mformation’s founder, called the ruling a victory, announcing “patents are a core part of our innovative products and are fundamental to the methods used for device management in the market today.”

The $147.2 million figure is based on the 18.4 million BlackBerry devices connected to Blackberry Enterprise Server deployments in October 2008, which is also when the original suit was filed against RIM. With a bit of number-crunching, Mformation will receive $8 per BlackBerry device.

Arguably, RIM’s best assets are its software and messaging services, which continue to be used worldwide. RIM’s ability to sell a product with the software to manage it has long been an attractive option, both for the channel and the enterprise. But with BlackBerry 10 devices on hold until  2013 and much of RIM’s $2.2 billion reserves set to be spent on restructuring the company and layoff compensation packages, another $147 million loss is a tough cross to bear.

Unsurprisingly, RIM attests they have internally developed all patents and technologies and saw this patent dispute as invalid. RIM plans to actively pursue alternative legal options based on post-verdict rulings.

The court battle with Mformation isn’t the only legal battle RIM is facing, either. In May, Nokia started to play patent hardball with RIM, HTC and Viewsonic, which was promptly followed up earlier this month with a personal patent dispute with RIM.

As handset makers compete with Apple – or, in some cases, with Microsoft and Google – patents are golden tickets arguably more valuable than gold. These patents are the chess pieces that can be moved around, hopefully keeping competition at bay by forcing (or restricting) the use of certain technology. When companies fail to innovate, they litigate. And while Mformation’s patent dispute doesn’t directly relate to the competition in the handset market, it makes it harder for RIM to compete with existing MDM vendors should it ever spin off its software and hardware arms.

Ultimately, we are watching vultures circling prey. Before RIM goes belly-up, expect the legal battles to continue until RIM closes up shop or is forcibly sold, quartered and forgotten.

One Response to “RIM Loses $147M in Mformation Patent Dispute”