Blackberry 2005 Annual Report Download - page 68

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During the third quarter of fiscal 2005, the Company recorded an expense of $24.6 million to provide for
additional estimated enhanced compensatory damages, estimated postjudgment interest, and current
and estimated future costs with respect to ongoing legal fees. The $20.3 million attributable to enhanced
compensatory damages and postjudgment interest attributable to the third quarter of fiscal 2005 was
classified as Restricted cash on the Consolidated Balance Sheets as at November 27, 2004.
On December 14, 2004, the Appeals Court ruled on the appeal by the Company of the District Court’s
judgment. The Appeals Court concluded that the District Court erred in construing the claim term “originating
processor”, which appeared in five of sixteen claims within NTP’s patents, but did not err in construing any
of other claim terms on appeal and affirmed the remainder of the District Court’s claim constructions. The
Appeals Court further concluded that the District Court correctly found infringement under 35 U.S.C. section
271(a), correctly denied the Company’s motion for judgment as a matter of law and did not abuse its discretion
in three of its evidentiary rulings.
The Appeals Court decision would remand to the District Court the questions of whether and to what extent
the jury verdict of infringement should be set aside, based on the prejudicial effect, if any, of the District
Court’s erroneous claim construction of the term “originating processor”. The Appeals Court ordered that
should such prejudicial effect be shown, and because the jury verdict did not specify the amount of infringing
sales attributed to each individual patent claim, or the specific devices and services determined by the jury to
infringe each separately asserted claim, the District Court on remand will also have to determine the effect of
any alteration of the jury verdict on the District Court’s damage award and on the scope of the District Court’s
injunction. As a result, the Appeals Court would affirm-in-part, vacate-in-part and remand certain matters for
further proceedings. The Company filed a petition for rehearing that is still pending in the Appeals Court.
During the fourth quarter of fiscal 2005, the Company and NTP entered into settlement negotiations, which
concluded with both parties signing a binding term sheet on March 16, 2005, that resolves all current litigation
between them. As part of the resolution, NTP will grant RIM and its customers an unfettered right to continue
its BlackBerry-related wireless business without further interference from NTP or its patents. This resolution
relates to all NTP patents involved in the current litigation as well as all current and future NTP patents.
The resolution covers all of RIM’s past and future products, services and technologies and also covers all
customers and providers of RIM products and services, including wireless carriers, distributors, suppliers and
ISV partners. Under the terms of the resolution, RIM will have the right to grant sublicenses under the NTP
patents to anyone for products or services that interface, interact or combine with RIM’s products, services
or infrastructure. The resolution permits RIM and its partners to sell its products, services and infrastructure
completely free and clear of any claim by NTP, including any claims that NTP may have against wireless
carriers, ISV (independent software vendor) partners or against third party products that use RIM’s BlackBerry
Connect/BlackBerry Built-In technology.
RIM will pay to NTP $450 million in final and full resolution (the “resolution amount”) of all claims to date
against RIM, as well as for a fully-paid up license (the “NTP license”) going forward. The Company and NTP
are currently working to finalize the definitive agreements.
During the fourth quarter of fiscal 2005, the Company recorded an incremental expense of $294.2 million
to adjust the total NTP provision to the resolution amount plus current and estimated legal, professional
and other fees, less the previous cumulative quarterly provisions for enhanced compensatory damages,
prejudgment interest, plaintiff’s attorney fees, estimated postjudgment interest, and current and estimated
future costs with respect to legal and other professional fees, and the acquisition of a $20 million intangible
asset. The $22.1 million attributable to enhanced compensatory damages and postjudgment interest with
respect to the fourth quarter of fiscal 2005 was classified as Restricted cash on the Consolidated Balance
Sheets as at February 26, 2005.
During fiscal 2005, the Company recorded a total expense of $352.6 million.
Research In Motion Limited •Incorporated Under the Laws of Ontario (In thousands of United States dollars, except per share data, and except as otherwise indicated)