Palm shares go down after NTP hits with patent lawsuit

NTP Inc; has filed a patent infringement lawsuit against Palm, maker of the Treo mobile phone, in a US court alleging that Palm's products, services, systems and processes have made an improper use of NTP's wireless e-mail technology. The news sent Palm’s shares tumbling down $1.17 to $14.24 in Nasdaq trading resulting in a loss of 7.6 per cent.

NTP holds a company that tries to collect license fees for a set of patents for a wireless e-mail system. The company issued a statement saying that it seeks recovery of monetary damages resulting from Palm's direct and indirect infringement.

Earlier the company was involved in a patent dispute with BlackBerry maker Research in Motion Ltd., which stretched to 5 years and eventually ended with RIM agreeing to pay a sum of $612.5 million to NTP.

Though it never accepted wrongdoing, RIM acknowledged they made an effort to settle the dispute as customers had delayed placing new orders due to the threat of a court-ordered shutdown of the BlackBerry system. NTP also has license agreements with Nokia, Good and Visto.

Following a ruling by the US Supreme Court last May, NTP may have greater difficulties in the case against Palm than it had in the one against RIM as the highest court imposed restrictions on injunctions in patent cases. According to the new rules patent holding companies are effectively prevented from using injunctions to bully manufacturers into purchasing a license on their technology.

NTP co-founder Donald E. Stout held Monday that they will try to resolve the matter serenely saying that his company has tried to work out a licensing agreement with Sunnyvale, Calif.-based palm. The lawsuit is a "last resort to protect our valuable intellectual property," Stout said in a statement.