BlackBerry Ltd (NYSE:BB) has fallen far since it helped to launch the smartphone industry. Since losing that battle, the Canadian company has been searching for a line of business that could restore its past glory.
Over the years, that has included tablets, enterprise software, autonomous car systems and even Android smartphones. It may have hit upon its most promising strategy yet: patent troll. A new BlackBerry lawsuit has been filed against Facebook Inc (NASDAQ:FB) alleging patent infringement.
If successful, this could be a big deal for BlackBerry and BB stock.
BlackBerry Lawsuit Accuses Facebook Apps of Patent Infringement
Reuters reported yesterday that BlackBerry has filed a lawsuit against Facebook, accusing its WhatsApp and Instagram apps of copying technology and features from BlackBerry Messenger.
The problem is, the BlackBerry patents being cited are extremely broad in nature. Ars Technica lists details and they include features like “using icons with numeric badges to signal the arrival of new messages,” and “muting a message thread.”
If BlackBerry succeeds in its request to stop Facebook from infringing on the patents, that means either a dramatic overhaul of the apps with severely reduced functionality, or shutting them down altogether. That’s not going to happen, so BlackBerry is likely hoping to see royalty payments.
And those same broad BlackBerry patents could then be used against virtually every other messaging platform out there, including those from Apple Inc. (NASDAQ:AAPL) and Alphabet Inc’s (NASDAQ:GOOGL) Google.
Transition to Patent Troll?
Facebook has no problem calling out the BlackBerry lawsuit as a shakedown in an attempt to generate revenue. Facebook’s lawyer doesn’t quite come out and call the company a patent troll, but the quote given Ars Technica comes pretty close:
“BlackBerry’s suit sadly reflects the current state of its messaging business. Having abandoned its efforts to innovate, BlackBerry is now looking to tax the innovation of others.”
Adding to the perception that weaponizing BlackBerry patents and ‘lawyering up’ is turning into a business strategy, the company has been in a bit of a legal warpath over the past year.
Last January, a BlackBerry lawsuit was filed against Nokia, demanding royalties on what Bloomberg described as products using “an industrywide technology standard.”
Last October, the company settled with Blue Products, after accusing the low-cost smartphone seller of infringing on patents covering technology such as time-stamped messages. The two reached a licensing agreement that will see BlackBerry collect royalties. And last May, a lawsuit against Qualcomm, Inc. (NASDAQ:QCOM) over royalties resulted in a $940 million payment to BlackBerry.
To put that in perspective, the company’s total revenue for Q4 was $297 million. These court battles can pay off.
With over 40,000 BlackBerry patents in its stockpile and BB stock down nearly 90% from its days as a smartphone giant, the temptation to use the courtroom to twist arms with the goal of settlements and royalty licensing deals has to be strong. Especially when the company looks at the deep pockets of the companies that steamrolled it to dominate the lucrative smartphone market: Apple and Google.
For its part, a BlackBerry representative told Reuters that litigation is “not central to BlackBerry’s strategy.”
However, there’s no arguing the point that with BlackBerry smartphone sales in the dumpster (the company and its manufacturing partners appear to have sold fewer than 1 million for all of 2017) and plenty of competition in both the self-driving car market and the enterprise software game, those BlackBerry patents are proving valuable.
We’ll see if 2018 brings additional BlackBerry lawsuit filings, but the courtroom just may become a key factor in future BB stock growth.
As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.
