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Just a week after Motorola Inc. itself became the target of legal action by Microsoft Corp. (MSFT - Analyst Report), it sued Apple Inc. (AAPL - Analyst Report) for the alleged infringement of 18 of its patents. Motorola subsidiary, Motorola Mobility Inc. also filed patent suits against Apple in federal court in Illinois and Florida.
 
Motorola Mobility filed three lawsuits and a trade complaint against Apple alleging that Apple’s iPhone, iPad, iTouch and some Macintosh computers illegally use Motorola's technology, such as method for distributing message traffic, among others.
 
Motorola is seeking an investigation and an injunction on the importation of infringing products. Motorola wants Apple to stop using its patents and seeks compensation.
 
In the past, Motorola made phones based on Microsoft Windows operating system, but then it switched to Google Inc.’s Android operating system. Recently, Microsoft filed a patent-infringement lawsuit against Motorola, alleging that Motorola's Android-based phones violate nine Microsoft patents covering the synchronization of email, calendars and contacts, scheduling of meetings, and notifying applications of changes in signal strength and battery power. Despite this, Motorola announced that it may use Windows 7 software in future.
 
Motorola is rebuilding its handset business around Android, open source software that is also used by HTC Corp. and Samsung Electronics Co. Motorola aims to return its mobile-phone operations to profitability in the fourth quarter of 2010 and then spin them off along with a division making television set-top boxes early in the first quarter of 2011.
 
This week Motorola also launched its new range of smartphones, namely, Bravo, Citrus, Defy, Droid Pro, Flipout, Flipside and Spice. All the devices are targeted toward cost conscious customers, with Droid Pro being the most prominent.
 
Motorola is benefiting from the significant market acceptance of Andriod as the next-generation 3G smartphone operating system. Motorola handsets feature an intuitive user interface and an efficient combination of Internet access, messaging and multi-media applications based on the Android ecosystem.
 
The major new innovation is the customized software interface called “MOTOBLUR”. This is a social-networking interface through which Motorola is trying to differentiate its products from other smartphones. Currently, more than 6,000 multimedia and social networking applications are available on the Android ecosystem. Motorola is trying hard to expand this platform using its proprietary MOTODEV program.
 
We maintain our long-term Neutral recommendation on Motorola. It is currently a short-term Zacks #3 Rank (Hold) stock.
 

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