Research In Motion

Research In Motion Limited (RIM) TSX: RIM, NASDAQ: RIMM is a Canadian telecommunication and wireless device company best known as the developer of the BlackBerry smartphone.

RIM is headquartered in Waterloo, Ontario, Canada. It was founded by Mike Lazaridis, who currently serves as its co-CEO along with Jim Balsillie.

History

Prior to the manufacture of the BlackBerry, RIM worked with RAM Mobile Data and Ericsson to turn the Ericsson-developed Mobitex wireless data network into a two-way paging and wireless e-mail network. Pivotal in this development was the release of the Inter@ctive pager 950, which started shipping in August 1998. About the size of a bar of soap, this device competed against the SkyTel two-way paging network developed by Motorola.

RIM's early development was financed by Canadian institutional and venture capital investors in 1995 through a private placement in the privately-held company. Working Ventures Canadian Fund Inc. led the first venture round with a C$5,000,000 investment with the proceeds being used to complete the development of RIM's two-way paging system hardware and software. A total of C$30,000,000 in pre-IPO financing was raised by the company prior to its initial public offering on the Toronto Stock Exchange in January, 1998 under the symbol RIM.

Since then, RIM has released a variety of devices running on GSM, CDMA, and iDEN networks. The ubiquity of these BlackBerry devices in the corporate environment and the compulsive use of its ability to quickly send and receive e-mail has earned it the nickname "Crackberry" in a reference to crack cocaine as users feel they cannot live without it.

In 2006 Research In Motion and Information Appliance Associates reached a licensing agreement whereby RIM would offer the complete version of PocketMac for BlackBerry to Macintosh users free of charge.

In October 2008, RIM was named one of "Canada's Top 100 Employers" by Mediacorp Canada Inc., and was featured in Maclean's newsmagazine.

RIM announced in February 2009 that they were expanding their global operations by opening an office and training facility in North Sydney, New South Wales, Australia. Just across the Harbour Bridge, ten minutes from the Sydney CBD, the new RIM offices were formally unveiled by Mr Thomas A.MacDonald, Consul General of Canada, at a ceremony attended by dignitaries from the New South Wales Government and North Sydney Council, as well as RIM’s partners and customers. The new office features training facilities, a research and development centre, a strategic partner marketing centre and technical support services. Total workforce provides 12,000 jobs world wide.

In June 2009 RIM has announced they were acquiring Dash Navigation, makers of the Dash Express. In August 2009, RIM acquired Torch Mobile, enabling the inclusion of a Webkit-based browser on their Blackberry devices.

On 18 August 2009, Fortune Magazine named RIM as the fastest growing company in the world with a growth of 84% in profits over three years despite the recession.

On March 26, 2010, the company announced acquisition of BlackBerry applications developer Viigo, a Toronto-based company. Terms of the deal were not disclosed.

RIM reached an agreement with Harman International on April 12, 2010, for RIM to acquire QNX Software Systems. "RIM is excited about the planned acquisition of QNX Software Systems and we look forward to ongoing collaboration between Harman, QNX and RIM to further integrate and enhance the user experience between smartphones and in-vehicle audio and infotainment systems," said Mike Lazaridis, President and Co-CEO at RIM. "In addition to our interests in expanding the opportunities for QNX in the automotive sector and other markets, we believe the planned acquisition of QNX will also bring other value to RIM in terms of supporting certain unannounced product plans for intelligent peripherals, adding valuable intellectual property to RIM's portfolio and providing long-term synergies for the companies based on the significant and complementary OS expertise that exists within the RIM and QNX teams today."

On September 27, 2010, RIM announced the long rumoured BlackBerry PlayBook tablet computer. The BlackBerry PlayBook was officially released to US and Canadian consumers on April 19th, 2011.

As of May 2010, RIM OS held 10.4% of the smartphone operating system market.

Growth

Year Sales Operating Income Net Income

2002  294,000,000 (58,000,000) (28,000,000)

2003 307,000,000 (64,000,000) (149,000,000)

2004 595,000,000 78,000,000 52,000,000

2005 1,350,000,000 386,000,000 206,000,000

2006 2,066,000,000 617,000,000 375,000,000

2007 3,037,000,000 807,000,000 632,000,000

2008 6,009,000,000 1,731,000,000 1,294,000,000

2009 11,065,000,000 2,722,000,000 1,893,000,000

2010 14,953,000,000 3,507,000,000 2,457,000,000

2011 19,907,000,000 4,639,000,000 3,411,000,000

Patent litigation

Since the turn of the century, RIM has been embroiled in a series of suits relating to alleged patent infringement.

In 2001, Research In Motion sued competitor Glenayre Electronics Inc for patent infringement, partly in response to an earlier infringement suit filed by Glenayre against RIM. RIM sought an injunction to prevent Glenayre from infringing on RIM's "Single Mailbox Integration" patent. The suit was ultimately settled.

In June 2002, Research In Motion filed suit against 2000 start-up and competitor Good Technology. RIM filed additional complaints through-out the year. In March 2004, Good agreed to a licensing deal, thereby settling the outstanding litigation.

On September 16, 2002, Research In Motion was awarded a patent pertaining to keyboard design on hand-held e-mail devices. Upon receiving the patent, it proceeded to sue Handspring over its Treo device.Handspring eventually agreed to license RIM's patent and avoid further litigation in November of the same year.

During the appeals, RIM discovered new prior art that raised a "substantial new question of patentability" and filed for a reexamination of the NTP patents in the United States Patent and Trademark Office. That reexamination was conducted separately to the court cases for infringement. In February 2006, the USPTO rejected all of NTP's claims in three disputed patents. NTP has appealed the decision, and the reexamination process is still outgoing as of July 2006 (See NTP, Inc. for details).

On March 3, 2006, RIM announced that it had settled its BlackBerry patent dispute with NTP. Under the terms of the settlement, RIM has agreed to pay NTP US$612.5 million in a “full and final settlement of all claims.” In a statement, RIM said that “all terms of the agreement have been finalized and the litigation against RIM has been dismissed by a court order this afternoon. The agreement eliminates the need for any further court proceedings or decisions relating to damages or injunctive relief.

See also: NTP, Inc.#RIM patent infringement litigation

On July 17, 2003, while still embroiled in litigation with NTP and Good Technology, RIM filed suit against Xerox in the U.S. District of Hartford, Connecticut. The suit was filed in response to discussions about patents held by Xerox that might affect RIM's business, and also asks that patents held by Xerox be invalidated.

On May 1, 2006, RIM was sued by Visto for infringement of four patents. Though the patents were widely considered invalid and in the same veins as the NTP patents - with a judgement going against Visto in the U.K. - RIM settled the lawsuit in the United States on July 16, 2009, with RIM agreeing to pay Visto US$267.5M plus other undisclosed terms.

On January 22, 2010, Motorola requested that all BlackBerry smartphones be banned from being imported into the United States for infringing upon five of Motorola's patents. Their patents for "early-stage innovations", including UI, power management and WiFi, are in question. RIM countersued later the same day, alleging anti-competitive behaviour and that Motorola had broken a 2003 licensing agreement by refusing to extend licensing terms beyond 2008. The companies settled out of court on June 11, 2010.

Acquisitions

Alt-N Technologies

Alt-N Technologies, Ltd., a software development company and division of Research In Motion (RIM) founded in 1996 by Arvel Hathcock produces and sells the MDaemon email server for Windows. Alt-N Technologies develops email messaging and security server applications for the medium and small business communities.

Alt-N Technologies’ products are sold and supported internationally through a network of distributors and resellers.

Products

Software Products

MDaemon – Multi-language SMTP/POP3 mail server software.

SecurityGateway – Email spam firewall server software that protects Microsoft Exchange and SMTP Servers from spam and malware.

RelayFax – email-to-fax and fax-to-email server software.

Hardware Products

MDaemon Email Server Appliance – Integrates MDaemon and SecurityPlus for MDaemon software into a single server appliance.

Industry Participation

Online Trust Alliance (OTA)

Domain Assurance Council (DAC)

Internet Engineering Task Force (IETF)

Messaging Anti-Abuse Working Group (MAAWG)

Industry Awards

Online Trust Alliance (OTA) 2007 Online Safety Leadership Award.

Certicom

Certicom Corp. is a cryptography company founded in 1985 by Gordon Agnew, Ron Mullin and Scott Vanstone.

The Certicom intellectual property portfolio includes over 350 patents and patents pending worldwide that cover key aspects of elliptic curve cryptography (ECC): software optimizations, efficient hardware implementations, methods to enhance the security, and various cryptographic protocols.

The National Security Agency (NSA) has licensed 26 of Certicom's ECC patents as a way of clearing the way for the implementation of elliptic curves to protect US and allied government information.

Certicom's current customers include General Dynamics, Motorola, Oracle, Research In Motion and Unisys.

On January 23, 2009, VeriSign entered into an agreement to acquire Certicom. Research In Motion put in a counter-offer, which was deemed superior. VeriSign did not match this offer, and so Certicom announced an agreement to be acquired by RIM,. Upon the completion of this transaction, Certicom became a wholly owned subsidiary of RIM, and was de-listed from the Toronto Stock Exchange on March 25, 2009.

DataViz

DataViz, Inc. is a software company located in Milford, Connecticut. They sell RoadSync, and MacLinkPlus. MacLinkPlus is a Macintosh program for converting files from one format to another. RoadSync utilizes the Microsoft Exchange ActiveSync protocol to access Exchange information which includes e-mail, calendar and contact information. On 8 September 2010, they sold their office suite Documents To Go and other assets to Research In Motion for $50 million.

The Astonishing Tribe

The Astonishing Tribe (TAT) is a company with headquarters in Malmö, Sweden. Founded in February 2002 by Mikael Tellhed, Ludvig Linge, Paul Blomdahl, Karl-Anders Johansson, Per Grimberg, and Hampus Jakobsson. TAT started out as a hobby project and for the first year the company worked with TV commercials, animation, post production for film, consultancy services within image compression for embedded systems, and interactive art.TAT was acquired by Research in Motion (RIM), the maker of the Blackberry smartphone, on 2 December 2010. They are set to bring "their talent to the BlackBerry PlayBook and smartphone platforms.

During the second year the company got traction in the mobile industry and started to employ people. Focus shifted completely to user interfaces, especially licensing technology for rendering and structuring of the user interface. As of September 2010 over 180 employees work for TAT at the offices in Sweden, South Korea, the United States, and the newly opened office in Japan. TAT works with some of the biggest mobile brands such as Samsung, Sony Ericsson, Orange and, Motorola. TAT also license software to other industries such as automotive and consumer electronics.

Some of the founding members have a history from the demo group Yodel. This group made a contribution to The Party 1996 called The Astonishing Tribe.

RIM stock option scandal settlement

In 2007 Co-CEO Jim Balsillie was forced to resign as chairman as the company announced a $250-million earnings restatement relating to mistakes in how it granted stock options. Furthermore, an internal review found that hundreds of stock-option grants had been backdated, timed to a low share price to make them more lucrative.

In January 2009, Canadian regulators stated that they were seeking a record penalty of $80 million USD from the top two executives, Co-CEOs Jim Balsillie and Mike Lazaridis. Furthermore, the Ontario Securities Commission (OSC) has pushed for Balsillie to pay the bulk of any penalty and relinquish his seat on RIM's board of directors for a period of time.

On February 5, 2009, several executives and directors of Research In Motion agreed to pay the penalties to settle an investigation into the backdating of stock options. The Ontario Securities Commission approved the arrangement in a closed-door meeting.

Under the terms of a settlement agreement with the OSC, RIM co-chief executive officers Jim Balsillie and Mike Lazaridis, as well as chief operating officer Dennis Kavelman, will jointly pay a total of $68-million (CDN) to RIM to reimburse the company for losses from the backdating and for the costs of a long internal investigation. The three are also required to pay $9-million (CDN) to the OSC.

Mr. Balsillie will step down from RIM's board of directors for a year, but will remain in his executive role.