RIM ordered to pay mobile device management company $147 mil in IP dispute
A few years ago, BlackBerry maker Research In Motion (RIM) introduced the Blackberry Enterprise Service (BES) Express. The free software works with existing servers, such as Microsoft Exchange Server and IBM Lotus Domino, to allow businesses to centrally manage the smartphones they provide to employees. Among the features are the ability to shutdown and wipe clean stolen devices, control security settings and reset passwords.
Considering all the ways that individuals can customize their personal-use smartphones, it makes sense that companies providing their employees with such phones could take advantage of wireless technologies to regulate them. It seems that for Canada-based RIM, providing employers with this option on BlackBerry devices, and offering the BES Express software for free, was an opportunity to keep sales of the struggling BlackBerry -- once dubbed the ‘CrackBerry’ because of how addicting and necessary it was to its possessors -- up, while also marketing it as a more professional alternative to the other brands that dominate.
The snag in RIM’s plan? They were not the first to come up with the idea of wirelessly connecting to a server, allowing for the management of several devices from one central location. Not only that, but Mformation Technologies, a mobile management device company based in New Jersey, patented such a system several years ago. The patent in question is 6,970,917, a “System and method for remote control and management of wireless devices.” This led to a legal battle that began in 2008,. According to Mformation, RIM refused to license the technology but used it in their new software anyway. Mformation sued, and four years later, on July 13 of this year, RIM was ordered to pay 147 million dollars, which breaks down to 8 dollars per BES-connected device sold since the patent was filed, for patent infringement.
Since a phone is very rarely just a phone anymore, there are new challenges businesses may face in developing policies for company-provided mobile devices. Naturally, security concerns as well as a need to limit personal use of the devices on company time and dollar can arise. Because of this, a system like the one patented by Mformation is useful and potentially very valuable.
However, legal battles between technology companies, especially those regarding intellectual property, are very common, and it is essentially unheard of to license a single patent for 8 dollars per unit. Mformation built itself on the concept of mobile device management and should receive compensation as it developed and was the first to patent a system for wirelessly controlling devices from a central server.
At the same time, the system uses wireless technology that has been in existence for several years and is a very general idea. It is difficult to comprehend that this one patent could be worth more than a hundred times more than the average mobile-device-related patent. If a software company like RIM was required to pay 8 dollars, or even half of that, for every patent license per unit, it would be impossible to stay afloat.
A system like the one proposed in this patent could be very appealing to business owners who desire to regulate use of company-owned phones simply, quickly and centrally. It can allow mobile device companies to specifically market smartphones compatible with this technology to the business world.
With the ruling on July 13, a very high value was placed on this patent. The royalties RIM was ordered to pay, and might have to pay on future sales, may not be practical in the long run. It will be interesting to see what Mformation does in the future in terms of utilizing the technology and licensing it out.