NEW YORK (AP) — Research in Motion Ltd.'s and Motorola Inc.'s dueling lawsuits could take years to settle, and even then the outcome poses risks to both phone makers, an analyst said Tuesday.
Last week Waterloo, Ontario-based RIM filed suit against Motorola, alleging it violated nine RIM patents and is refusing to extend a contract beyond January 2008. RIM's suit came just after Motorola sued RIM, also alleging patent infringements.
The final outcome of any litigation remains uncertain and the longer legalities are dragged out — it could be three years before the start of any trial — the longer the impact on both companies' performance, RBC Capital Markets analyst Mike Abramsky said in a client note.
RIM's suit may or may not help it gain leverage in paying lower royalties to Motorola, he said.
''Recently the Federal Trade Commission has begun to crack down on licensers who participate in standard setting, agree to Fair and Reasonable licensing and then try to leverage their patent position by seeking huge royalties,'' Abramsky said in a client note.
Recent precedents, including a case involving eBay Inc. and MercExchange LLC, may make it difficult for Motorola's case to succeed. In December a federal judge ordered eBay to pay MercExchange $30 million for patent infringement.
The lawsuit comes at an awkward time for Schaumburg, Ill.-based Motorola, given its recently announced plans to explore strategic options for its cellular business, including a potential sale, Abramsky said. He kept a ''Sector Perform'' rating on Motorola's shares and an ''Outperform'' rating on RIM's stock.
In premarket trading, shares of Research in Motion rose 41 cents to $95.60. Shares of Motorola closed Friday at $11.28.
