18 May 2001
Canada's Research In Motion said on Thursday it had won a patent to protect its
method of directing e-mail to wireless devices, and analysts said this could force
competitors such as Palm Inc. and Nokia to license its technology, solidifying
RIM's competitive edge.
RIM also said it is suing Glenayre Electronics Inc. for infringing on its
and its patent. If the lawsuit is successful, analysts said, Palm, Nokia, Motorola
and others could be forced to license RIM's technology.
"If they win this case the barriers to entry will be erected and they will
sustainable competitive advantage," said J.P. Morgan analyst Paul Coster.
Waterloo, Ontario-based RIM, which makes the two-way Blackberry pager,
U.S. Patent No. 6,219,694 lets it claim ownership over its single mailbox integration
technology. This technology enables a user of its devices to read, compose,
forward and reply to e-mail sent to a desktop computer using only one address.
"Glenayre is a blatant imitator of Blackberry and they are an aggressor
RIM, so we had no choice but to defend ourselves against Glenayre's actions,"
RIM's chairman and co-chief executive, Jim Balsillie, told Reuters.
A Glenayre spokeswoman told Reuters, "we really can't comment because we
haven't been served with a complaint."
Glenayre uses RIM's trademark "Always On, Always Connected" moniker, which
RIM is trying to license to resellers of other devices, Balsillie said.
Shares of RIM rose 59 cents to $34.08 on Thursday on Nasdaq after an 11
gain on Wednesday, but have lost 57 percent in value since the beginning of 2001,
underperforming the Toronto Stock Exchange's 300 index, which is down 9 percent
in the same period.
Competitors have also fared poorly in 2001, with Handspring Inc. stock
percent and Palm, which this week slashed prices because of a glut of older
devices, down about 75 percent. Both companies shares were up only slightly in
midday trading on Nasdaq.
GLENAYRE SUIT COULD SET PRECEDENT
"These types of patents are well established to be perfectly protectable,"
Ostrow, a lawyer and co-chairman of the patent group at Brown Raysman Millstein
Felder and Steiner in New York.
"It is the burden of other people to prove it is invalid ... they would
have to say the
patent is unenforceable, and would have to give a pretty good reason," Ostrow said.
Analysts said the patent win is positive for RIM, and if RIM were to win
against Glenayre, other companies wanting to include "always on, always
connected" integrated e-mail in their devices could be forced to use RIM's
Glenayre is "the toe in the water", said Robert McWhirter, vice-president
portfolio manager at Triax Investment Management Inc. "It may set the precedent.
Then when they go after Palm or Motorola...it could take 1-2 years to conclude
litigation with Glenayre and then 3-5 years to impact larger players such as
Motorola, Palm, Nokia."
RIM's actions are protective in nature, and are not aimed solely at extracting
license revenues from larger companies, which could crush RIM because of their
clout with network carriers, distributors and manufacturers, McWhirter said.
"And RIM, might say, well that's nice, but unfortunately we've got the
chicken soup and in order for you to take advantage of all that wonderful
distribution, you've got too talk to us," McWhirter said
Duncan Stewart, who manages the Strategic Nova Canadian Technology Fund
he doubts the patent win and lawsuit will have a large impact on RIM's revenue. He
added that what the market really hopes to hear is when British
Telecommunications' BT Cellnet will launch RIM's product in Britain.
"The patent is for a thing that other people do in different ways - it's
competitors, it may be tougher for competitors, but they will go around it and find
another way of doing it rather than licensing it from RIM," Stewart said.
RIM's two-way e-mail pagers were launched at the beginning of 1999, and
been dubbed the "crack cocaine" of e-mail, with about 164,000 Blackberry units
connecting mobile workers with their corporate e-mail.
Devices made by Palm, Motorola and Handspring have won over millions of
the consumer market, but have yet to rival RIM's dominance among corporate
users, a market that analysts view as the most lucrative in the long term.