BlackBerry Ltd. boss John Chen doesn’t need another headache.
But an important patent case now before the U.S. Supreme Court could soon send him reaching for the Tylenol bottle.
The case goes to the heart of how far U.S. courts should go in protecting patents for often vague software-based business methods. Think smartphone gadgets and Internet browsing software. At a recent hearing of the top court, several of the justices pondered the merits of slapping much stricter limits on software patents that are based on abstract ideas.
A decision in the case, expected by June, could affect the value of hundreds of thousands of patents owned by BlackBerry and other tech businesses that depend on this kind of software. Billions of dollars’ worth of intellectual property is at stake.
“The Supreme Court’s decision has the potential to reverberate in courtrooms across the United States and boardrooms across the globe,” said Alan Fisch, an intellectual property lawyer with Fisch Hoffman Sigler LLP in Washington, D.C.
The case is narrowly about a computerized method of limiting currency transaction risks developed by Alice Corp. of Australia. CLS Bank International, a currency trading consortium owned by many of the world’s largest financial institutions (including Canada’s Big Five banks), successfully challenged the validity of the patent in the lower courts.
Legal experts say the outcome could be far more sweeping as the U.S. Supreme Court struggles to distinguish between true inventions and old ideas that have been turned into software code.
U.S. Circuit Court Justice Kimberley Moore, whose court heard the appeal in the case, warned that “hundreds of thousands of patents” are at risk, including software for business methods, financial systems and telecom systems. “There has never been a case that could do more damage to the patent system,” Justice Moore pointed out in her decision.
That brings us back to BlackBerry, whose future is dependent on exploiting similar kinds of software.
The Waterloo, Ont.-based company would not be the only victim of a much narrower interpretation of software patents. But given the smartphone maker’s recent struggles, including a massive loss of market share, it could prove particularly damaging.
Analysts have pegged the value of BlackBerry’s intellectual property at anywhere from $800-million to $3-billion (U.S.). That represents a substantial chunk of its current stock market value of nearly $4-billion.
The case has pitted most of the big IP producers, such as IBM and Microsoft, against the likes of Google, Facebook and Netflix, which argue that bogus software patents and litigation by “patent trolls” is stifling their ability to innovate.
The Obama administration has also weighed in, urging the Supreme Court to significantly limit software patents that use technology to automate established business practices or economic concepts. “An abstract idea does not become patent-eligible merely by tacking on an instruction to use a computer to carry it out,” U.S. Solicitor-General Donald Verrilli told the court.
BlackBerry has ranked as one of Canada’s leading R&D spenders since the early 2000s, amassing a trove of roughly 7,500 patents and applications – regarded as one of the most diverse portfolios in the technology industry.
The company, however, has had a sometimes strained relationship with the U.S. patent system, dating back to its costly settlement of an infringement case pursued by a tiny patent licensing company, NPT Inc. BlackBerry went on a patent-filing binge after the NPT case, which cost the company $612.5-million and diverted funds from developing new devices.
Jim Balsillie, BlackBerry’s former co-chief executive, still seethes about what he sees as a U.S. legal system that has allowed patent trolls to run amok. He has publicly called for stronger protection of intellectual property in both Canada and the United States.
It would be a bitter irony if the Supreme Court’s efforts to rein in the litigious U.S. patent environment comes back to bite BlackBerry again.
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- Updated April 28 4:00 PM EDT. Delayed by at least 15 minutes.