The prolonged patent fight between NTP and Research in Motion Ltd. (RIM) is finally settled, but it offers a number of lessons for IT managers, analysts said.
The case, resolved early this month with a payment by RIM of US$612.5 million to NTP, shows that IT managers should be prepared when buying technology subject to a patent infringement lawsuit that could require expensive and frustrating workarounds or lead to an outright shutdown.
"The first lesson learned is don't panic," said Jack Gold, an analyst at J. Gold Associates in Northboro, Mass. "Markets have a way of adjusting without massive disruptions of service."
Gold also urged managers to remember that anytime a company buys into a proprietary service, it risks problems if the supplier goes defunct. And he stressed that companies should have workable contingencies in place. "Not having a contingency plan is a dangerous position to be in," Gold said.
Companies, especially those with large numbers of users, also should ask suppliers for some kind of indemnification plans in case the technology goes south.
Even before asking a potential vendor for a guarantee, IT managers should ask a series of tough questions before signing off on deals, said Ken Dulaney, an analyst at Gartner in Stamford, Conn.
Is that patent real, or pending?
For example, Dulaney said, if a vendor claims a patent on the technology being considered, an IT manager should ask whether the patents are pending or have already been granted. "The only reason they mention patents, usually, is to try to impress you," Dulaney said.
More important, in light of the NTP fight with RIM, is to ask whether a vendor has been to court over a patent. "I'd discount their claims about a patent totally until they've been to court" and have won the right to the patent there, Dulaney said.
It's also useful to find out whether the vendor has requested licenses from other vendors using the same technology, Dulaney said.
If anything, NTP's aggressiveness should have taught the technology world that a patent and even the US court system are not a sure thing, he said.
"Anytime you purchase a vital product you must ask: 'Has anybody notified you that you are in violation on your patent?' Or better, 'Do you expect anybody to say you are in violation?' That kind of question is becoming important as part of [the IT manager's] valuation of technology. That's what NTP vs. RIM taught us."
Dulaney said NTP was so aggressive with RIM that he wonders if NTP will sue other companies, including the service providers that move wireless e-mail traffic to BlackBerry enterprise servers and through the airwaves to BlackBerry handhelds.
US patents - woefully broken?
Both Dulaney and Gold said the US patent process failed miserably. "There's a huge need for patent reform," Gold said. "The patent system in the U.S. is broken."
Dulaney echoed that view, calling the patent process in the U.S. "woefully broken."
With an overburdened US Patent and Trademark Office (PTO) facing huge numbers of applications, the odds are against patent officials finding evidence of "prior art," meaning information on whether an invention already exists that is the same as the one being reviewed for a patent.
"The US Patent Office has to ensure that the technology under consideration hasn't happened before and the likelihood of being sure is less and less as more and more patents are filed around the world," Dulaney said.
In the US, the search for prior art is conducted only by the PTO, but in many other countries, a patent office will ask for outside comment with "many more eyeballs looking for prior art," Dulaney said. "We're placing too much of a work burden on our patent office."
Another lesson Gold said he learned from the dispute between NTP and RIM is that IT managers need to keep users and company executives informed about what's happening with the technology, so they don't rely on unreliable outside information. "No offense, but I read some really bad press reports on this case," Gold said.