Apple Inc.'s landmark, $1-billion patent victory over Samsung Electronics Co. Ltd. has investors reexamining the prospects for rivals struggling to keep up with the world's dominant smartphone players.
Shares of Research In Motion Ltd. , Nokia Corp. and Microsoft Corp. , which makes the Windows Phone software that Nokia currently uses on smartphones, all rose in Monday trading as investors contemplated how the ruling could affect wireless industry players that were not caught up in the legal battle.
The jury verdict in the U.S. District Court for the Northern District of California sided emphatically with Apple and found Samsung – the South Korean conglomerate that has found huge success as the unofficial global flag bearer of Google Inc.'s Android mobile software – infringed several of Apple's patents related to the iPhone and iPad.
Apple is now seeking a court ban on U.S. sales of eight Samsung smartphone models. With the possibility of an injunction coming in September, investors and analysts see possible gains in the U.S. market for RIM and Nokia.RIM, which has struggled through a delay of its upcoming BlackBerry 10 platform, rose as much as 5 per cent Monday before closing up 2 per cent, while Nokia jumped nearly 10 per cent and Microsoft rose slightly. Apple shares gained nearly 2 per cent.
"Microsoft and RIM are both hoping that they can be a third alternative for [wireless] carriers," said Eric Jackson, founder and managing partner of hedge fund Ironfire Capital LLC. "With this ruling, there's a real chance both Windows Phone and BB10 will get a second look. Of course, RIM has to ship it first."
Nokia, which has struggled in developed markets against Apple and Android devices, is already out with a powerful but commercially unsuccessful lineup of smartphones that run Microsoft's Windows Phone operating system. But starting this fall a newer version of Windows mobile software will hit the market and Nokia could benefit from any potential setbacks to Samsung, the world's largest smartphone maker.
"Nokia's up more than RIM [because] if there's any short-term disruption, Windows Phone 8 is launching earlier," says Canaccord Genuity technology analyst Mike Walkley.
Though RIM's BlackBerry 10 operating system is a rival to Android and Samsung, Mr. Walkley said RIM shares likely rose on Monday because investors were renewing their focus on the value of patents in the sector, and RIM could be looked on more favourably should the board choose to sell the company.
RIM holds a variety of patents tied to wireless communication and security, including a patent portfolio acquired from Nortel. Analyst estimates for the value of RIM's patent portfolio range from about $1-billion to $2.5-billion, but companies such as Motorola Mobility – which Google bought largely for the patents – have sold for more than the market expected given the frequency of patent litigation in the sector as smartphones become more similar.
RIM declined to comment on the implications of the verdict. Executives have frequently pointed to the occasional troubles of Android-using handset makers as evidence that the Waterloo, Ont.-based company's strategy to continue developing its own mobile software was a wise decision.
But Florian Mueller, a wireless industry consultant who focuses on patent issues, said RIM's patent portfolio, unlike Apple's and Nokia's, has not been broadly tested through arduous litigation. In addition, Mr. Mueller said, RIM won't be able to save itself from legal battles just because it has decided not to adopt Android like Samsung.
"It's quite easy to get a lot of patents if you have a lot of engineers and a legal department," Mr. Mueller said. "Nokia has proven the strength of its portfolio ... I'm not saying RIM is necessarily unable to do this, but the fact that RIM's portfolio is untested in litigation makes it hard for any buyer to be confident."
Near the height of its global success, RIM was forced to pay $612.5-million in a patent settlement in the U.S. against NTP Inc.
But Mr. Mueller said RIM's recent troubles with poorly received products may have shielded it from the more vicious litigation now bouncing around the wireless space. He added that if RIM's touch-screen BlackBerry 10 phones find a receptive audience, the comparatively small Canadian firm could find itself in court battling much larger global rivals such as Apple or Samsung.
"If they wanted to build traditional keyboard devices, there wouldn't be much of an issue," Mr. Mueller said. "If they get into the multi-touch devices and they find success, they will run into Apple."