Skip to main content
Publish date:

Palm Shares Find Safe Haven

Some observers say the company is in a better position than RIM.

Shares of handheld-device maker



had stabilized in the wake of an announced patent lawsuit, as investors and legal analysts began to see the company in a less precarious position.

Shares of Palm were recently off 6 cents to $14.62, after bouncing back by about 3% on Tuesday, which followed a loss of more than 6% on Monday after NTP's suit was announced.

NTP's suit alleges that certain Palm products infringe sevenNTP patents. But Palm responded Tuesday by noting that examiners at the U.S. Patent and Trademark Office have already rejected the claims once. "All seven of the patentsasserted are being re-examined and have been rejected by there-examiners as invalid," Palm said in a press release.

Palm also said that the NTP patents disclose a pager-based email servicethat has nothing in common with the mobile-computing devices inventedby Palm. The company doesn't make any money from the email services on itsdevices, which could make it difficult for NTP to pressure thecompany into a quick settlement.

Palm said it has been in "occasional contact" with NTP concerning alicense to the patents prior to the lawsuit, but the patents subsequently became the subject of re-examination proceedings by the PTO.

NTP's lawsuit against Palm revives memories of NTP's recentoffensive against

Research In Motion

TheStreet Recommends


, which resulted in a $612.5 million settlement.

Palm, however, is in a different position. For starters, a recent U.S. SupremeCourt opinion found that a patent infringement -- or the possibility of one --does not allow for an automatic injunction against the allegedviolator, said Robert Plotkin, a Concord, Mass.-based attorney.

The Supreme Court said when deciding requests for injunctions, courts have to consider factors including whether the plaintiff has suffered an irreparable injury, if the remedies available are inadequate, and whether the public interest would be disserved by a permanent injunction.

That gives Palm a legal boost that RIM didn't have. RIM's settlement came largely because the company wanted to avoid a possible injunction against the service, a potential move that had created uncertainty among users of the company's Blackberry service.

"Without the threat of an injunction over their head, Palm mightfeel more confident and willing to fight than settle," said Plotkin.

Then, there's the all-important patent re-examination process. Thepatent office is currently looking into the validity of some of NTP'spatents and that could buy Palm enough time to drag out the case.

"Re-examination can take months or even years, and the court mayvery well wait or stay the case till the outcome of that process isclear," said Plotkin.

That's something else that RIM had to do without. "It is ourunderstanding that the reason RIM settled when it did was because itlost at trial before the PTO patent re-examination was done and,therefore, a later finding of invalidity wouldn't affect RIM'sexposure," wrote Jonathan Hoopes, an analyst with ThinkEquity Partnersin a Tuesday research note. He has a buy rating on Palm stock.

Still NTP is a mean rival, and Palm understands that. Its earlier talks with NTP about patent licenses suggests as much.