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Motorola, RIM kiss and make up, to share technology patents.

Cellphone-maker Motorola Inc. and BlackBerry-maker Research in Motion Ltd (RIM) struck a deal on Friday that will allow RIM to license Motorola's patented technologies in return for an upfront payment and royalties.

The technology licensing agreement ends two years of acrimonious legal wrangling between the two companies. Motorola and RIM were engaged in a legal battle ever since their licensing pact expired in December 2007. Motorola had approached the US International Trade Commission (ITC), accusing RIM of infringing on its patents. RIM accused Motorola of "demanding exorbitant royalties" on patents that are essential to its business. RIM also alleged that Motorola violated nine of its patents and broke a 2003 cross-licensing agreement by refusing to agree on new terms beyond January 2008.

Company sources said the new deal covers several different types of high-speed wireless technologies including WiFi, short-range radio technology, and emerging fourth-generation (4G) wireless broadband technologies. It also covers several cellphone functions: the management of applications, the user interface, and power management. The deal, sources say, allows both the companies to share technology and transfer patents.

The financial details of the deal were not disclosed. It wasn't clear whether the deal would have any impact on the current fiscal quarter earnings of the two companies.

Market analysts say they were not surprised by the announcement because patent-infringement lawsuits take several years to settle and generally end in a licensing agreement.

The new pact, analysts say, will boost Motorola's status as a technology innovator and will change investors' perception about the company.

Analysts say the deal will also help cut litigation costs and will allow both companies to focus on developing new devices and compete with rivals such as Nokia, Samsung, LG Electronics, Sony-Ericsson, and Apple Inc.

Motorola, the Schaumburg, Illinois-based technology company, was the world's second largest cellphone seller after Nokia as recently as Q1FY07. Since then it has struggled to produce a follow-up to its thin Motorola Razr feature phone, which was launched in 2004 and became a runaway hit. The company last year spent around $100 million in advertising iPhone-rival Motorola Droid but the device did not sell as well as the company hoped.

BlackBerry maker RIM holds the largest share of the US smartphone market with its line of Blackberrys, which are popular with the corporate users. However, later launches such as the BlackBerry Bold 9700 and BlackBerry Storm 2 have been disappointments. Investors are also concerned that RIM's market position is at risk as flashier smartphones, including Apple's new iPhone 4 and a wave of Android devices, attract consumers' interest.

According to industry research firm iSuppli Corp, Nokia sold 107 million handsets in Q1FY10, followed by Samsung (64.3 million), LG Electronics (27.1 million) and Sony Ericsson (10.5 million) combined.

During the same period, RIM sold 10.4 million units, Apple sold 8.7 million units and Motorola sold 8.5 million units. The stat for Motorola includes both conventional and smart phones.

According to industry research firm The Gartner Group, sales of smartphone operating systems are a useful proxy for phones smartphones sold. Among smartphone operating systems, Nokia's Symbian is No.1, controlling 44.3 percent of worldwide market share of smartphones sold in Q1FY10. RIM comes a distant second with 19.4 percent market share, followed by Apple in the number three spot with the iPhone (15.4 percent).

On Friday shares of NYSE-listed Motorola closed up 3.95 percent at $7.11. Nasdaq-listed RIM closed up 0.66 percent at $59.50.
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Publication:International Business Times - US ed.
Date:Jun 14, 2010
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