June 11 (Bloomberg) -- Research In Motion Ltd., maker of the BlackBerry smartphone, agreed to pay Motorola Inc. an undisclosed amount to settle their battle over patents to wireless technology (Sony Vaio VGN-FZ battery) .
RIM will make an upfront payment to Motorola and pay royalties for future use of the technology, the companies said in a joint statement today, without providing specific terms. The companies also agreed to license each other’s patents related to industry standards for wireless phones and e-mail (Sony VGP-BPS8 battery) .
RIM and Motorola, which is preparing to spin off its handset business, have been suing each other since a license agreement that ran from 2003 to 2007 expired and the two were unable to reach a new deal. The litigation included cases in the U.K., a dispute over imports before the U.S. International Trade Commission and a half-dozen lawsuits in federal court in Texas (Sony VGP-BPL9 battery) .
Disputes among makers of smartphones, which can surf the Web and play video, have increased as sales of the devices outpace the rest of the handset market. Apple Inc.’s iPhone and RIM’s BlackBerry overtook Motorola in global unit sales last quarter, according to researcher ISuppli Corp. Motorola makes the Droid, which runs on Google Inc.’s Android software (Sony VGP-BPL11 battery) .
“It behooves them to come to terms and settle,” said Ashok Kumar, an analyst with Rodman & Renshaw Inc. in New York, who has a “market perform” rating on RIM. “The reality of the market is that eventually they will be stepping on each other’s toes (Sony VGP-BPL15 battery) .”
No ‘Material Impact’
Motorola rose 27 cents, or 4 percent, to $7.11 at 4 p.m. in New York Stock Exchange composite trading. RIM added 39 cents to $59.50 on the Nasdaq Stock Market (ASUS Eee PC 1000HE Battery) .
Marisa Conway, a spokeswoman for Waterloo, Ontario-based RIM, and Tama McWhinney, a spokeswoman for Schaumburg, Illinois- based Motorola, said the companies aren’t providing more detail on the financial terms of the agreement (Dell Inspiron 6400 battery) .
RIM, which had $15 billion in sales last year, said in a regulatory filing that the settlement isn’t expected to affect its fiscal first-quarter results “or to have a material impact on operating results going forward (SONY VAIO VGN-FZ4000 Battery) .”
Investors won’t “particularly care if there is a charge unless it’s sizable” because there is an assumption that RIM would have had to pay some royalty fees to Motorola as part of an agreement, said Nick Agostino, an analyst at Mackie Research Capital in Toronto. He has a “buy” rating on RIM (Toshiba PA3399U-2BAS Battery) .
A charge of $500 million would “raise eyebrows,” he said.
Visto, NTP Settlements
RIM last year agreed to pay $267.5 million to end a patent dispute with mobile-phone software maker Visto Corp., and in 2006 paid $612.5 million to settle a suit filed by patent owner NTP Inc. over e-mail technology (IBM ThinkPad T40 Battery).
RIM is also fighting a patent complaint before the ITC brought by Eastman Kodak Co. over digital-camera technology, and last month, FlashPoint Technology Inc. filed a case against RIM, Nokia Oyj, HTC Corp. and LG Electronics Inc. over focus and flash settings in cameras. RIM is also part of a case involving Samsung Electronics Co. memory chips used in the BlackBerry (Sony VGN-FZ460E battery) .
In all three cases, the trade agency has the power to block imports of products found to infringe U.S. patents.The most recent development in the Motorola and RIM dispute came in February when the ITC said it would look into claims that BlackBerry devices infringe five patents (SONY VGP-BPS8 battery) .
Motorola filed the complaint Jan. 22, targeting the BlackBerry Pearl, Curve, Bold, Storm and Tour, as well as their battery packs. The patents relate to some early-stage innovations developed by Motorola in areas such as Wi-Fi access, application management, user interface and power management (SONY VAIO VGN-FZ Battery) .
RIM’s share of industrywide sales climbed to 3.6 percent, and Apple’s rose to 3.04 percent last quarter, according to El Segundo, California-based ISuppli. Motorola’s market share during the period shrank to 3 percent from 3.6 percent. Smartphone sales may climb 46 percent this year worldwide, more than triple the pace of the overall market, according to researcher Gartner Inc (Dell Inspiron 6000 battery) .
The ITC case is in the Matter of Wireless Communication System Server Software, 337-706, U.S. International Trade Commission (Washington). The civil cases are 08cv1545; 10cv480; 09cv72; 09cv464; 08cv317; and 08cv284, all U.S. District Court for the Northern District of Texas (Dallas) (Fujitsu Lifebook S6120 battery)