Handspring Jumps on News of Lawsuit Settlement

The company settles a patent-infringement suit filed by Research In Motion.
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Handspring

(HAND)

shares jumped 12% in morning trading, after the company settled a patent-infringement suit filed by

Research In Motion

(RIMM)

.

Over the course of two days, shares in the handheld maker have swelled 29 cents, or more than 35%, to $1.10, boosted by a favorable court ruling for Microsoft, as well as news that Handspring had settled the lawsuit and had updated its email software and services.

Research In Motion, based in Waterloo, Ontario, said Tuesday that it had settled a suit, filed on Sept. 18, charging Handspring with infringing on patents it holds on keyboards built into handhelds.

Mountain View, Calif.-based Handspring agreed in principle to pay a licensing royalty to the company. While the sum of the royalty hasn't been disclosed, the move will further crimp Handspring's cash reserves. At the end of the third quarter, the company had $74 million in unrestricted cash. But with an estimated $28 million cash burn per quarter, some analysts said the company may need to scrounge around for additional funding to operate through next year.

RIM American depositary receipts were down 37 cents, or 2.7%, at $13.16.