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Financial Post (Canada): RIM pays the price of prosperity; Patent Challenge (Shell lost patent infringement case)

Published: Jul 12, 2007

The more success Research In Motion Ltd. achieves, the more unwanted attention it attracts, this time it is from the goddess of arts and crafts.

A new patent-infringement lawsuit against RIM, one of Canada’s best-known brands, surfaced this week, and experts say that is the price you pay for sitting at the top of the heap.

“The more successful a company becomes, the more sensitive they are to litigation. They become a much easier target for people to want to prey on them,” said Rob Enderle, principal analyst at Enderle Group. “If you’re not successful … who cares?”

Minerva Industries Inc., formed by a California inventor in 1996, is now pointing its finger at the ultra-successful Black-Berry maker, alleging patent infringement.

But while many of these suits are dismissed out of hand as a nuisance brought by so-called “patent trolls,” investors shouldn’t be so quick to write off Minerva. John Kim, the owner of the company that shares its name with the Roman goddess of arts and wisdom, already has a patent infringement victory under his belt.

Mr. Kim in 2003 settled a case against Axius-Auto Shade Inc., a division of Shell Oil Co., and ended up with royalty payments. The lawsuit centred on a 1993 patent Mr. Kim held for shades motorists put on the inside of their windshields to block the sun from heating up their vehicles, said Marc Fenster, Mr. Kim’s lawyer in the RIM lawsuit.

Mr. Kim’s success in the sun-blocker case adds creditability to his battle against RIM because it demonstrates he is an inventor savvy enough to win a patent case and extract cash from a large company such as Shell.

The lawsuit against RIM concerns one patent that contains 35 claims, and he plans on amending the lawsuit in August to add another patent, this one with 130 claims, Mr. Fenster said. The patents cover “advanced features” on cellphones, including how they connect to the Internet.

RIM is not the only company in Mr. Kim’s sights. He also filed two other lawsuits –one against a cellphone carrier; the other against 43 defendants, with Motorola Inc. tagged as the lead defendant — regarding the same patents.

“It looks like he’s kind of rolling the dice,” Mr. Enderle said. “And the roll-the-dice approach, historically, is not very successful.”

Typically, patent-holders would first go after a smaller company and use that win to hang over the heads of other companies.

Mr. Fenster sharply denies accusations of Minerva being a patent troll, a firm that buys up old patents in order to take successful companies to court. “Minerva is a holding company that Mr. Kim formed to hold his OWN patents,” the lawyer said in an e-mail. “Minerva does not purchase and assert patents that it has no connection to.”

Minerva wants between 5% and 7% of wholesale BlackBerry sales dating back to 2004. Patent lawsuits against RIM instantly conjure up nightmares about the tech company’s battle against NTP Inc. Waterloo, Ont.-based RIM settled that case for US$612.5-million after years of litigation. Observers argue RIM’s painful experience in the NTP saga will help it better deal with patent cases such as the one Minerva has brought to the table.

RIM declined to comment.


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