. . . AND A SMALL SIGH OF RELIEF CAME FROM RIM . . . The U.S. Court of Appeals for the Federal Circuit threw out a district court ruling that Research-In-Motion (RIM) had infringed on six patent claims held by privately held NTP. The decision means that instead of facing 11 affirmed claims of infringement -- as was the case after the court's earlier ruling -- RIM is now facing just seven. The case is being remanded for further consideration (and yes, the injunction is still on the table).

The Federal Circuit overturned the lower court's finding that RIM had infringed NTP Inc.'s method claims, but reaffirmed the infringement of patents of the e-mail "system." (the decision can be viewed here - all 75 pages).

Also, the Federal Circuit addressed the issue of 35 U.S.C. 271(a) and infringement "within" the United States:

Because a process is nothing more than the sequence of actions of which it is comprised, the use of a process necessarily involves doing or performing each of the steps recited. This is unlike use of a system as a whole, in which the components are used collectively, not individually.

We therefore hold that a process cannot be used "within" the United States as required by section 271(a) unless each of the steps is performed within this country.

In the present case, each of the asserted method claims of the ’960, ’172, and ’451 patents recites a step that utilizes an "interface" or "interface switch," which is only satisfied by the use of RIM’s Relay located in Canada. Therefore, as a matter of law, these claimed methods could not be infringed by use of RIM’s system. See Eli Lilly & Co. v. Am. Cyanamid Co., 82 F.3d 1568, 1571 (Fed. Cir. 1996) (discussing the enactment of section 271(g) and stating that "[p]rior to the enactment of the [Process Patents Amendments Act of 1988], a patentee holding a process patent could sue for infringement if others used the process in this country, but had no cause of action if such persons used the patented process abroad to manufacture products, and then imported, used, or sold the products in this country"); see also Zoltek Corp. v. United States, 51 Fed. Cl. 829, 836 (2002) (stating that "if a private party practiced even one step of a patented process outside the United States, it avoided infringement liability, as [section 271(a)] was limited to acts committed within the United States").

Thus, we agree with RIM that a finding of direct infringement by RIM’s customers under section 271(a) of the method claims reciting an "interface switch"or an "interface"is precluded by the location of RIM’s Relay in Canada. As a consequence, RIM cannot be liable for induced or contributory infringement of the asserted method claims, as a matter of law.

The difference in affirmed infringements could also prove important in settlement negotiations or in determining a final judgment award. In June, settlement negotiations between the two companies broke down. They had previously announced in March an initial agreement under which RIM would pay NTP $450 million to settle the case.

Also, NTP's patents under reexamination are still being shot down in the USPTO. Is NTP worried? Not if you ask NTP's attorney James Wallace, who properly stated that "all we need is just one claim to shut them down."