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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)
Annual Report 2006 69
For the years ended March 4, 2006, February 26, 2005 and February 28, 2004
On December 16, 2005, the District Court issued a scheduling order which requested initial briefs by
both parties on these matters by January 17, 2006 with responses by both parties and the U.S. federal
government due by February 1, 2006 on the question of damages and an injunction in light of the CAFC’s
August 2005 ruling. A hearing was convened on February 24, 2006 at the District Court.
On March 3, 2006, the Company and NTP jointly announced that they signed denitive licensing and
settlement agreements. All terms of the agreement were nalized and the litigation against RIM was
dismissed by a court order on March 3, 2006. The agreement eliminated the need for any further court
proceedings or decisions relating to damages or injunctive relief. On March 3, 2006, RIM paid NTP $612.5
million in full and nal settlement of all claims against RIM, as well as for a perpetual, fully-paid up license
going forward. This amount included money already escrowed by RIM as of March 3, 2006.
The licensing and settlement agreement relates to all patents owned and controlled by NTP and covers all
of RIM’s products, services and technologies. NTP granted RIM an unfettered right to continue its business,
including its BlackBerry related business. The resolution permits RIM and its partners to sell RIM products
and services completely free and clear of any claim by NTP, including any claims that NTP may have
against wireless carriers, channel partners, suppliers or customers in relation to RIM products or services,
(including BlackBerry Connect and BlackBerry Built-In technology), or in relation to third party products
and services, to the extent they are used in connection with RIM products and services.
As at February 26, 2005, RIM had accrued $450.0 million in respect of the NTP litigation which included
an intangible asset of $20.0 million. As the full and nal settlement amount paid on March 3, 2006 was
$612.5 million, an additional charge to earnings in the amount of $162.5 million was recorded in the scal
2006 operating results. During scal 2006, the United States Patent and Trademark Ofce (the “Patent
Ofce”) issued various ofce actions rejecting all claims in all NTP patents. Accordingly, though the rulings
of the Patent Ofce are subject to appeal by NTP, given the conclusions and the strength of the conclusions
reached by the Patent Ofce, no value has been ascribed to the NTP license. This resulted in an additional
charge to earnings of $18.3 million reecting the book value of the intangible asset at the time the original
binding term sheet was ruled unenforceable. The charge of $162.5 million, the write-off of the intangible
asset of $18.3 million as well as incremental legal and professional fees in respect of the litigation resulted
in a charge to earnings of $201.8 million in scal 2006.