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Nokia sues RIM, BlackBerry sales hang in balance

Shane Schick

If RIM's misfortunes were a drinking game, we'd all be falling off our chairs drunk by now. The latest legal wrangle between the BlackBerry maker and Nokia over patents, however, is a good reminder that it's time to sober up.

On Wednesday Nokia said it had asked a California court to enforce an arbitrator's decision that would forbid RIM to make or sell anything equipped with wireless LAN (WLAN) capabilities. The dispute revolves around an agreement over Nokia's WLAN patents which the company claims RIM is violating. Unless RIM pays Nokia royalty fees, Nokia could press harder for an injunction. For RIM, of course, the clock is ticking ever more loudly with the planned launch of BB10 on Jan. 30.

This comes only a few days after RIM shares had enjoyed a nice bounce up nearly 14 per cent last Friday, having already climbed 33 per cent in the previous week. Nokia had been experiencing a similar lift of about eight percent, based on growing sales of its Lumia 900 smartphones. It's difficult, therefore, not to jump to the easiest conclusion: that the patent fight is a way for Nokia to curb the momentum of a rival and that RIM's might never get BB10 into the hands of its remaining loyal customers.

The reality is that an injunction is probably never going to happen. According to Aaron Edgar, a patent lawyer with Gowlings in Toronto who does not represent either firm, even a preliminary injunction would be difficult to pull off before the end of January. "For (Nokia), it's more of a threat to initiate a resolution where they would get payment," he said. "RIM is a going concern. It would cost too much for the courts to put an injunction that would shut them down."

Ramon Llamas, a smartphone industry analyst with Framingham, Mass.-based research firm IDC, pointed out that the patent agreement would need to be enforced across multiple jurisdictions, including Canada and Europe, which would all take considerable time.

"This is far from over. I think this first decision is significant, but not the end of everything," he said.

RIM probably also has the means to settle up. A few months ago when I spoke with Alec Saunders, RIM's vice-president of developer relations, he fended off all the negative talk about the company by bragging about it having no debt and cash in the bank. If push comes to shove, paying to use WLAN technology may end up being a standard line item in RIM's R&D budget.

No matter what happens between RIM and Nokia, the big fight will be between the BlackBerry and the iPhone, and whether or not consumers will be swayed by BB10's new features and revamped user interface. Llamas, who has seen the previews, remains optimistic.

"It's much, much more than a wireless connection," he said. "It's light years above and beyond what BB7 was before. BB10 will still have legs."

Given RIM's ongoing unexpected moments of volatility, though, investors may need their sea legs, too.