It has taken years, and in the process, handheld computer maker palmOne (NASDAQ:PLMO) has been through more costume changes than Nathan Lane on opening night. But last week, a judge invalidated a patent claim, effectively dismissing a long-running, but potentially draining, lawsuit from Xerox (NYSE:XRX).
At issue was the handheld's very soul, the quick and useful Graffiti system of shorthand by which users enter text into the device. Xerox filed a lawsuit seven years ago, alleging infringement on its patent for "unistroke" symbols. The litigation haunted palmOne's steps until the judgment, though that seems odd since the spinoff PalmSource (NASDAQ:PSRC) is technically in charge of the operating system.
The dismissal came because the judge believed palmOne's argument for "prior art." In a nutshell, it stated that similar shorthand recognition systems were in existence prior to Xerox's claim, and so the latter's patent should never have been granted. The ruling shows the danger in patent litigation. If you lose, you can leave the courtroom with much less than you had going in.
What does this mean for palmOne shareholders? Not much, I would argue. Sure, it's nice not to have the threat of damages or future royalty payments hanging over the company, but shareholders have long been numbed to this particular fright. The future looks cloudy. Sales -- not to mention the reporting -- have been less than stellar. Competition is stiff, and the firm's product line, outside of the Treo phone/PDA combo, hasn't sparkled. My own house was Palm-powered for years, but we recently jumped ship for the excellent and inexpensive offerings from Sony (NYSE:SNE).
Earlier this month, the stock took a run on some far-fetched speculation that Dell (NASDAQ:DELL) might be interested in buying the firm. If you want a wild ride, palmOne can give you that, but until there's some better evidence of solid sales, I wouldn't touch this one with a 10-foot stylus.
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Fool contributor Seth Jayson has a strong "buy" on Graffiti, but he owns no company mentioned. View his Fool profile here.
