A US appeals court issued a mixed ruling yesterday in RIM's patent dispute with NTP, upholding a decision that RIM infringed upon patents held by NTP, but vacating an injunction ordered by a lower court and sending the case back for further deliberations.

NTP owns patents for a wireless communications system that it believes cover wireless e-mail systems such as RIM's BlackBerry. In 2002, a District Court jury in Virginia agreed, awarding NTP $23.7 million in damages. The court later slapped an injunction on sales of the popular BlackBerry wireless e-mail device and server software within the US that was stayed pending this appeal. Corporations use the devices and software to allow employees to access e-mail.

The Court of Appeals ruled that the lower court had correctly interpreted several infringement claims made by NTP against the BlackBerry device and software. However, it also ruled that the lower court incorrectly interpreted the scope of one key claim. It said that since a different ruling on that particular claim might change the outcome of the case, it remanded the case to the lower court to decide if the jury verdict should be overturned and lifted the injunction.

Despite this ruling, NTP is pleased with the appeals court decision because the claims that were upheld cover all of RIM's products, said company lawyer Jim Wallace. NTP believes the lower court will not change the damage award or the injunction. RIM issued a statement that confirmed the judgment and injunction were vacated on Tuesday, but it declined to comment further on any aspect of the case.

Patent disputes tend to center on how courts interpret claims made in the original patent. When a company or individual submits a patent application, they write the claims as broadly as possible in hopes of applying the patent to as many areas as possible.

When disputes arise, the courts must interpret the meaning of the claims in the patent, and decide whether those claims cover the device or concept that is allegedly infringing on the patent. In this case, the appeals court agreed with the lower court that 11 of the 16 claims in NTP's patents cover products such as the BlackBerry.

But the lower court incorrectly interpreted one claim concerning the term "originating processor", which might have an impact on five other claims. NTP defined the term as any processor in a system like the BlackBerry that helps pass a written electronic message along to a recipient.

RIM argued that "originating processor" should stick closely to the dictionary definition of the term "originating", in that such a processor would have to initiate the transmission of a message. In the original case, NTP argued that several processors along the path of the message can introduce new information, such as destination routing addresses, and the lower court agreed with this interpretation. But the appeals court agreed with RIM, and asked the district court to re-examine the judgment and injunction in light of the new claim construction.

The case will now head back to the Virginia court, which must decide if the new definition of "originating processor" will have any impact on the judgment against RIM and the injunction.

Trading was halted on RIM's stock pending the decision. It rose almost $9 from its opening price on the Nasdaq market following the release of the decision but fell back after investors realised its full scope of the decision. Trading was again halted. When it reopened, RIM's stock price fell five percent.