This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

RIM Takes Another Shot

The latest setback for RIM is likely to be the one that forces a settlement in the long-running dispute, says David Schamens, partner with Invictus Funds.

"I think the market wants this uncertainty out of the way. If it is, the stock might really rip," says Schamens, whose fund has no position in RIM.

Shutting down the service wouldn't be in anyone's interest, says Ovum's Entner.

"The worst case scenario is that existing users won't be forced to shut down, but there might be an injunction on selling to new subscribers," says Entner.

But NTP co-founder Don Stout says he will pursue an injunction if that's what it takes to get RIM to recognize its legal obligation.

"Here is a company that's a willful infringer and they don't want to pay us a dime," says Stout. "And if they refuse to pay us a dime, they are going to get shut down. We have no choice but to keep them shut down until they choose to take a license."

Jeff Neuburger, a patent attorney with Brown Raysman Millstein Felder & Steiner in New York, says Wednesday's court action "puts RIM in a very difficult position."

"They don't have a lot of options available to them," says Neuburger. From a legal perspective, "I don't see a lot of hope for them on the horizon," he says.

But RIM's statement Wednesday noted that the Supreme Court recently decided to hear an appeal in another high-profile patent dispute, that between eBay (EBAY) and MercExchange.

Neil Smith, a patent attorney with Sheppard Mullin Richter & Hampton in San Francisco, points to that case. At issue in eBay-MercExchange is whether courts should by default issue injunctions against patent infringers, particularly in cases where the patent holder is a mere holding company -- not an operating business that actually uses the patents.

Even if the Supreme Court does not hear RIM's case directly, it could delay the enforcement of any injunction until it makes a ruling on eBay, Smith says.

The Supreme Court's decision to hear the eBay case "provides a ray of hope [to RIM] of a substantial delay and a different result," says Smith.

Jay Somaney, a hedge fund manager at TSG Capital Group whose firm has no position in RIM, expects to see a settlement but says the bill may be larger than investors expect. Somaney, whose firm sold its RIM puts Wednesday, believes RIM may end up paying NTP north of $1 billion on top of what he calls stiff licensing fees. He says those fees will force analysts to bring down their earnings projections for coming years.

"You buy on future earnings, and right now, earnings are not predictable," says Somaney. "At the moment there's too much uncertainty. And what we know thus far, going forward can only mean further bad news for RIM."

Schamens thinks the lawsuit has helped obscure other problems for RIM. Specifically, the competition is increasing in the company's wireless email business, helped along by new technology, such as faster wireless connections, he says. That's why even if RIM's stock jumps on news of a settlement, Schamens thinks it is likely to fall as time passes.

The company recently had to cut subscriber-growth projections for two coming quarters.

"Once you have bad news, there's usually more to come," Schamens says. "I'm a firm believer in that. You don't want to be in these stocks when bad news starts to come out after years of good news."

2 of 2

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 18,053.71 +23.50 0.13%
S&P 500 2,088.77 +6.89 0.33%
NASDAQ 4,806.8590 +33.3870 0.70%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs