Patent Foes Band Together for NTP Settlement

NTP, the patent-holding company that won US$612.5 million in a 2006 case against RIM, announced Monday it has reached a settlement with 13 of the biggest players in the tech industry.

Since NTP held eight U.S. patents relating to wireless email delivery, it battled most of the major smartphone manufacturers, vendors and the providers that transfer email across wireless systems. The 13 companies: AT&T, Verizon Wireless, Sprint, T-Mobile, Apple, HTC, Motorola Mobility, Palm, LG, Samsung, Google, Microsoft and Yahoo. Nokia and RIM already pay licensing fees to NTP.

NTP did not publicly disclose the full terms of the settlement, but NTP reportedly will receive licensing fees from the companies involved and the pending litigation will be dismissed.

NTP did not respond to our request for further details on the story.

Patent Trolling?

Since NTP holds more than 25 patents related to the tech industry but doesn’t produce products of its own, it has drawn negative criticism as a “patent troll.”

However, that term no longer elicits much outrage, said Phil Hartstein, vice president and portfolio manager at IP Navigation Group. Consumer demand and the cost of innovation make patent battles an important part of the smartphone market.

“What you have now is a market that understands that while companies used to devote billions of dollars to research and development and innovating, now consumers are demanding those innovations faster,” Hartstein told the E-Commerce Times. “Therefore, these companies have to start integrating features, and with that comes patent licensing. That starts to be a calculation of these major companies’ costs.”

For a company like NTP, being able to assess the cost of doing business in such a rapidly evolving industry really isn’t that different from any business person being able to discern what will hold value in the future of any industry, noted Michael Feigin, patent and trademark attorney.

“Yes, they are a patent troll, but just as one could, say, buy huge tracts of swamp land in central Florida and try and sell it for large amounts of money when Disney World moves in next door, it is perfectly legitimate to acquire other types of property — namely, intellectual property — and sell it when it becomes more valuable,” Feigin told the E-Commerce Times.

Par for the Course

Having to pay licensing fees, damages, or other costs required by the settlement is unlikely to have any kind of immediate effect on the consumer smartphone market, said Feigin, although the increasingly high costs of legal battles can’t be helping any of tech’s major players.

“Given the amount of money cellular phone companies have, I don’t think it will really hurt their bottom line or affect them all that much,” he said. “The problem, in my mind, isn’t so much about the damages they have to pay, but the uncertainty of the legal system — especially relating to patent infringement — and the high costs of litigating patent infringement.

What’s also interesting, said Hartstein, is noting which companies band together in wide-scale patent battles like the scuffle with NTP. Many of the biggest names in the settlement, such as Apple and Samsung, are fighting each other in fierce, worldwide courtroom wars, bent on knocking their competitor’s products out of the market.

“It’s interesting to me that all 13 companies apparently settled at the same time,” said Hartstein. “Who was organizing that, I don’t know. They’re all usually happy to fight against each other when it’s one on one, but when a stranger turns up, it can turn into the group against the new guy. In a case like this, with so many players, they’re all looking at the same numbers — how many players, what is the growth trend, have the patents been battle-tested — and when you have the answers to those variables, a settlement like this was bound to happen.”