Legal Law

BlackBerry Buddies Fb

(Photo by Sean Gallup / Getty Images)

Never doubt the power of investor excitement. Or suppose that the only value of a patent litigation – especially for a public company that monetizes its patents – is the amount of damage. Those two lessons were reinforced by a wild trading day last Friday for a legendary hardware company that has become heavily dependent on its huge patent portfolio for revenue generation. The Company? None other than BlackBerry, the maker of electronic companions for a generation of lawyers. At one point on Friday, the company’s market cap surged over $ 1 billion before dipping to 8% or the equivalent of a few hundred million (just) the day, adding to the company’s value. In addition to the price swing, over 150 million stocks traded hands-on, ending a frenzied trading round just before the weekend.

What started the fireworks? Initially, there were rumors of a global patent agreement between BlackBerry and Facebook – rumors that were quickly followed by confirmation that an agreement had been reached. As expected, the terms of the settlement were announced as confidential, but that didn’t stop investors from increasing BlackBerry’s share price, possibly on the assumption that Facebook had agreed to pay a significant amount of money in exchange for patent peace. The declining excitement for the news, which was reflected in the decline in BlackBerry stock price at least as the day went on, was most likely an expression of sophisticated investors who realized that optimistic assumptions about how much Facebook was willing to pay were speculative at best. Yes, a payment may have been arranged by Facebook, but that fact (or the amount) will likely be confirmed in the next quarterly investor updates from BlackBerry at the earliest. Still, Friday’s action in the BlackBerry share price is a strong reminder of the potential added value for public companies launching a patent monetization campaign.

While the terms of the settlement may have been confidential, it is worth examining what a comparison between BlackBerry and Facebook might have looked like. It is even more worthwhile to assess how the movements and countermovements (some of which I recorded on these pages as early as 2018) that each side has put in place over the years of litigation between the parties may have contributed to last week’s outcome to have. While we can speculate that the settlement could include a cross-license as well as a global license to the BlackBerry portfolio that would rule out future claims against FaceBook, it’s difficult to really know the actual terms of the settlement – no matter how interested investors are in the Knowing the details. What we do know is that after years of litigation, both sides were able to reach an agreement.

From a timing perspective, it’s not surprising that the settlement follows a negative decision for BlackBerry in the Federal Circuit. As reported in TheRecorder, BlackBerry’s attempt to overturn unfavorable Alice judgments in its Facebook and Snap cases appeared to be going well, given that the “Federal Circuit sounded … like it could revive those patents.” Despite any optimism that might have emerged from the hearing, the Federal Circuit Panel was quick to issue Rule 36 of the inadmissibility affirmation. Given this recent setback, BlackBerry certainly seems motivated to end its campaign against Facebook before doing more damage to its patent portfolio.

Despite the setbacks against Facebook, it would be unfair to call BlackBerry’s campaign a complete failure. For one thing, there came a point where an agreement could be announced, which resulted in an increase in the company’s value. It also revealed that it can go head-to-toe with a highly experienced patent defendant – one with the resources and will to implement a strategy to defend textbook patent activists who claim a counterclaim, intellectual property rights, and early validity issues against them made BlackBerry patents exists against it. In short, BlackBerry managed to survive another day, perhaps against an opponent who is less inclined to fight back.

Assuming the settlement did not result in Facebook making a significant payment to BlackBerry, it is likely that the money spent on Facebook in its own defense compared to the financial requirements that BlackBerry is getting The beginning of the fall has faded. This would make defense costs, no matter how high, money well spent – both in terms of financial savings compared to BlackBerry claims and in terms of deterring potential patent monetization hopes. The latter goal should not be underestimated, because if Facebook were able to fend off an attack by a (former) tech giant known for innovation and many thousands of patents, what hope does a patent holder with less pedigree have against the company? Yes, patent owners can and occasionally can win against the most persistent defendants. But it remains a risky venture, especially against a company like Facebook.

Ultimately, this case reminds us not only that even a confidential settlement can bring dividends to a patentee, but also that even the most heated patent disputes can and must be resolved at some point. The balance of power between plaintiff and defendant can shift over time as court decisions and market factors impact. However, reaching an agreement is always an option, and skilled litigators do this well for their clients by taking this into account while trying to get the best bargain available once a settlement window opens. If anything, BlackBerry befriending Facebook drives this lesson home.

Please send me comments or questions at [email protected] or via Twitter: @gkroub. Suggestions or thoughts on topics are very welcome.

Gaston Kroub lives in Brooklyn and is a founding partner of Kroub, Silbersher & Kolmykov PLLC, an intellectual property litigation boutique, and Markman Advisors LLC, a leading patent consultancy to the investment community. Gaston’s practice focuses on intellectual property litigation and related advice, with an emphasis on patent issues. You can reach him at [email protected] or follow him on Twitter: @gkroub.

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