RIM Patent Lawsuit:$147.2 Million Verdict Comes At 'Worst Time,' Analyst Says

Posted: Updated:
RIM LAWSUIT LOSS
Thorsten Heins, President and CEO of Research in Motion (RIM), speaks at the company's Annual General Meeting, less than two weeks after announcing disappointing financial results, deep job cuts and the latest delay in its BlackBerry 10 software, in Waterloo, Ontario, Tuesday, July 10, 2012. Analysts believe RIM is running out of time to turn itself around. Sales of the once-pioneering BlackBerry phones fell 41 percent in the latest quarter and likely won't pick up again until new phones come ou | AP

Just as the dust began to settle from a tumultuous annual meeting, Research In Motion was hit with another setback Friday as a northern California jury ordered the troubled BlackBerry maker to pay $147.2 million in a patent lawsuit.

The Waterloo, Ont.-based company was fresh out of Tuesday's meeting — which saw board members take some heat even as they hung on to their seats —when the verdict came down in the suit over a remote management system for wireless devices.

The decision comes at the worst time for RIM (TSX:RIM), which reported a first quarter loss and delayed the release of its much-hyped BlackBerry 10 operating system until next year, an analyst said.

While the technology giant is no stranger to patent lawsuits, which are considered par for the course in the sector, this particular case didn't garner much attention until the verdict, Carmi Levy said Saturday.

"There's never a good time to lose a $147-million judgment in court but there certainly is a worst time and this clearly is it for RIM," he said in an interview.

"Beyond the money, there's a huge psychological impact to losing a case like this," he said.

"To the outside world, it looks like the losing team has been kicked once again while it's down ... It's yet more salt in the wound at a time when critics are looking for excuses to pile on against RIM and now they're found another."

Levy said fighting the verdict — a move RIM said it is considering — will divert key resources the company should be using to refocus and get back on track.

The penalty represents a "fairly significant chunk of change" for the company, which is currently sitting on roughly $2 billion in cash reserves, he said.

"It's yet another diversion of resources for a company that desperately needs to focus its efforts on one thing: bringing new products to market and turning its fortunes around. And anything that takes away from that singular focus ... reduces the potential for that to actually happen," he said.

Research In Motion said it is "disappointed" the jury sided with the Delaware-based Mformation Technologies and is "evaluating all legal options."

"RIM has worked hard for many years to independently develop its leading-edge BlackBerry technology and industry-leading intellectual property portfolio, and RIM does not believe that the Mformation patent in question is valid," the company said in a statement Saturday.

Shareholders at the annual general meeting expressed their frustration and some pushed for a major shakeup of the company's board of directors.

The meeting was the first opportunity since last summer that most of the company's investors have had an opportunity to speak directly to RIM's executive team, including new chief executive Thorsten Heins.

Shares in the company, which traded for more than $30 per share less than a year ago, have recently dropped below $8.

Massive changes have engulfed much of the operations at the struggling company in recent months as it has raced to bring its much-delayed BlackBerry 10 operating system and smartphones to market.

BlackBerry 10 — which many see as a make-or-break innovation for the company — is expected to face fierce competition from Apple's iPhone and smartphones using the Android operating system and possibly other rivals.

Around the Web

RIM Loses Patent Case, Must Pay $147 Million

RIM Lures Consumers With Free Booze, Money At 'Meet The Playbook' Event

RIM Found Guilty of Infringing Mformation Patent

RIM Must Pay $147 Million Over Mformation Patent