Motorola, Samsung agree to curb litigation

By SHIHOKO GOTO, Senior Business Correspondent  |  July 1, 2005 at 2:56 PM
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WASHINGTON, July 1 (UPI) -- Korean electronics giant Samsung's announcement Friday that it will cooperate in certain areas with its U.S. rival, Motorola, seemed to surprise investors pleasantly, because they pushed the value of Samsung's shares to its highest level in more than two months in what has been a largely flat market.

Investors advanced Samsung's stock despite the company's decision not to release details about its cross-licensing agreement with the Schaumburg, Ill., phonemaker, but the two mobile giants are expected to be able to achieve significant cost savings by avoiding going to court over intellectual-property rights, which often have bogged down telecommunications companies to date.

Samsung outlined the latest agreement with Motorola in a filing to the Korea Exchange.

Jeff Kagan, an independent telecom analyst in Marietta, Ga., told United Press International the latest agreement will let the two companies "avoid going to court, and waste time and energy on suing" each other about patent and intellectual-property infringement, and instead focus more attention on developing products and marketing.

Nevertheless, few analysts expect the latest deal to impact the global telecommunications market significantly, even though Motorola and Samsung rank second and third, respectively, in the industry.

Kagan noted that for consumers, the agreement means little, because it will not lead directly to new products or any changes in the existing network system.

"It's not a big deal for the customers -- it's more for the companies," Kagan said, adding that he thinks the pact probably will not affect Nokia's position as the world's biggest mobile-phone manufacturer, even though the Finnish giant also might want to consider making a similar move in the future.

"There are so many telecom companies ... and players out there right now ... and so much more room for litigation," that any effort to reduce the number of lawsuits between companies would be a good idea for the industry's longer-term growth, Kagan said.

Odd, but neither company chose to publicize the agreement -- neither Samsung nor Motorola issued a public statement about it.

Samsung's shares ended Friday on the Korean Stock Exchange up 1.42 percent from the earlier session, closing at 501,000, while Motorola's shares by late-morning Friday fell slightly lower in trading on the New York Stock Exchange, down 0.2 percent from the earlier session, to 18.23.



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