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RIM, Moto Take Patent Fight to Court

While Research In Motion (RIM) and Motorola battle in court over the use of each other's patents and licensing, experts say the smartphone vendors need each other to survive and hope the litigious action won't continue for long.

"Going to court is expensive, and both these companies are facing their own challenges in the market and need to keep their eye on the ball if they want to stay competitive," Carmi Levy, senior vice president of strategic consulting at AR Communications, told InternetNews.com.

RIM, Levy explained, has faced increasing competition from large players capable of "swamping the company" if the vendor loses focus.

Motorola, he notes, is already battling to stay in a leadership spot amid rumors of selling its handset unit. The company "needs to focus on regaining traction," amid recent significant losses, he adds.

Last Friday, Motorola filed two separate legal actions against RIM. One, launched in the Delaware courts, claimed RIM's thumb-typing patents are invalid and not subject to a license to Motorola.

In its Texas motion, Motorola claimed RIM is infringing on certain Motorola patents related to BlackBerry and wireless messaging. In response, RIM filed suit over the weekend claiming that Motorola's patents tied to routing messages are invalid.

Both RIM and Motorola declined interview requests but did e-mail responses to InternetNews.com on the legal action.

[cob:Related_Articles]"We commenced these legal actions to assert our rights and seek proper compensation for the value of our intellectual property, which has enabled the wireless communications innovations that many use every day to be such a success," a Motorola spokesperson wrote.

Motorola's intellectual property is used in RIM's products and that company's BlackBerry service. According to Motorola, RIM entered into a license agreement that expired this January. The vendor contends that the patents are not subject to any licensing requirements by telecommunication standards bodies and that Motorola is not obligated to license these patents to RIM.

"We believe that RIM's claims are entirely without merit, and Motorola intends to vigorously defend itself," wrote a Motorola spokesperson.

"Motorola’s strong R&D and intellectual property are critical to our business," the Motorola representative added. "Motorola believes in the value of its IP and will move aggressively to protect that value on behalf of our customers, partners and shareholders."

RIM did not release a statement but provided a copy of its response complaint to the Texas suit. The 61-page document details what RIM said are infractions of Motorola's use of patents and stated "Motorola has broken its promises," in regard to licensing technology.

Bill Hughes, In-Stat senior analyst, surmised that the patent dispute may be tied to Motorola's 2006 acquisition of Good Technology, which allowed Motorola to compete in message-routing technology.

"Motorola probably wants a lot more money from RIM now that they are competing more directly in this area," Hughes told InternetNews.com.

But that's not the only issue in play, the analyst added.

"First, I believe that Motorola needs the RIM patents for its Q device," he says. "If they do not work out something, it would be hard for Motorola to keep selling the Q."

One thing both Levy and Hughes believe is that neither company can afford a long legal battle like the one RIM fought with patent holding firm NTP. That lawsuit, which RIM lost, awarded $612.5 million to NTP.

[cob:Special_Report]"In that case RIM faced serious consequences as its e-mail service could have been stopped by the courts. Nine out of 10 times cases like this are settled quietly. Litigation is expensive and time-consuming, and I hope that they can work it out sooner rather than later," Hughes said.

For his part, Levy described the legal action as "little more than a tempest in a teacup," noting that neither vendor has the "luxury of fritting away precious resources" on legal action.

While Motorola claims that the patent dispute is not tied to its recent announcement that it was "exploring the structural and strategic realignment of its businesses to better equip Mobile Devices to recapture global market leadership and to enhance shareholder value," Levy acknowledged that patent hurdles could thwart any potential sale.

"A potential buyer would discover this kind of issue in due diligence, and the legal action also sets a tone that Motorola likely doesn't want in play if it's looking to sell," he says.