BlackBerry maker RIM could benefit from Apple patent victory
Published on Monday August 27, 2012
Michael Lewis Business Reporter
Apple’s epic patent victory Friday over Samsung and its Android software boosted the market value of the iPhone maker by $12 billion, (U.S.), but it also threw a lifeline to a much smaller company, Waterloo’s Research In Motion Ltd.
RIM shares rose by 13 cents to close at $7.07 on the NASDAQ Monday as investors bet that its trove of mobile patents and the company itself have gained value as a result of the jury verdict in California.
Stock in other smartphone and tablet PC makers that do not use the Android platform, notably Microsoft and Nokia, enjoyed an upturn as well.
In a verdict reached after only 21 hours that is seen as a vindication of Apple co-founder Steve Jobs’ focus on design, the jury found that Samsung infringed six of seven design-oriented patents for its mobile devices.
It said Suwon, South Korea-based Samsung, the leading smartphone maker, had copied design patents to mimic the look and feel of Apple’s iPhone and iPad. News of the verdict shaved more than $13 billion from Samsung’s market value.
The jury also ruled that several Samsung products illegally used such Apple creations as the ability to zoom text with a tap of a finger. The court ordered Samsung to pay Apple $1.05 billion in damages, with Samsung indicating that it plans an appeal.
Apple is also seeking to block the sale of eight models of Samsung’s smartphones in the key U.S. market, including its Galaxy S devices, although the ban would not apply to newer handsets. A hearing on the injunction motion is set for Sept. 20.
Analysts said Samsung may have to delay the release of new devices to change their designs as it seeks to compete with Cupertino, California-based Apple’s new iPhone and possibly a smaller iPad.
Ron Laurie, managing director of Silicon Valley IP firm Inflexion Point Strategy, LLC, said the verdict means any device with the look and feel of Apple products is legally vulnerable. “The problem,” he said, “is that consumers want devices that look like an iPhone.”
He said it significantly increases the value of patents that protect iPhone and iPad design features, arguing that if RIM’s patent portfolio has “the right stuff, the whole Android world would be a buyer.”
Analysts said the verdict will likely slow the growth of Android used by vendors including Samsung, HTC, LG and Motorola, now a division of Google Inc.
Android commands more than 65 per cent of the smartphone market as consumers choose devices running on its open-source operating system over more expensive Apple models. Samsung is the biggest maker of Android phones.
Google says the patents at issue do not relate to Android software but analysts said the verdict will nevertheless empower Apple to file more patent lawsuits against Android vendors.
IDC mobile software analyst Al Hilwa said the Samsung ruling presents an opportunity for RIM, which is staging a global “road show” aimed at wooing telecom carriers and app developers to its next generation BB10 handsets and its operating software.
Hilwa said the telecom traffic carriers are hungry for a viable alternative to the leading mobile device vendors and platforms.
UBS analyst Amitabh Passi added in a note to investors that it’s “very unlikely” Apple could defeat Android by repeating the U.S. legal victory in the rest of the world since cellphone carriers could not accept dominance by Apple.
“It [the BlackBerry] may not be their favorite phone, but the carriers desperately want a third or fourth operating system,” Hilwa said.
“A slowdown in Android activity due to patent uncertainty and possible injunctions could open a window of opportunity for the coming Windows 8 and BlackBerry 10 platforms,” Baird Equity analyst William Power added in a report.
“Any negative repercussions for Android could be construed as directionally positive for Nokia and RIM, though both still face an uphill battle in our judgment.”
Hilwa said while the Samsung verdict increases the value of defensive patents and may make RIM a more attractive acquisition target, the company must first deliver a compelling BB10 lineup on schedule by the first quarter of 2013.
Shares in Apple, the world’s richest company by market value at $633.38 billion, gained 1.9 per cent to close at $675.68 Monday before pulling back after hours. Samsung Electronics Co. Ltd. slumped the most in four years in Seoul trading.