Palm Shares Fall On Worries of Apple Legal Fight

Shares of Palm fell as much as 8 percent Thursday as investors worried it could face a legal challenge from arch-rival Apple related to Pre, Palm's upcoming touchscreen phone.

Apple's Chief Operating Officer Tim Cook said late on Wednesday that his company would use all its weapons to fight anybody that "ripped off" its intellectual property.

Paul Sakuma / AP

Some analysts said that could mean Apple will sue Palm over Pre's multi-touch interface, which lets users navigate a Web site by pinching their fingers together or spreading them apart on the phone's screen.

Apple , which has been much lauded for its multi-touch feature in iPhone launched in the summer of 2007, was careful not to name a specific company in its comments, but several analysts saw them as a thinly veiled threat to Palm.

"Palm is the first one that would spring to mind. You've got a new product with similar features to iPhone and you have executives leading the charge from Apple," said Avian Securities analyst Matthew Thornton.

Thornton was referring to executives such as Palm's Executive Chairman Jon Rubinstein, who used to be top hardware engineer at Apple. Fred Anderson, now a director at Palm, was previously Apple's chief financial officer.

However, Palm spokeswoman Lynn Fox said in an email that "Apple was not the first to do multi-touch."

"Palm has been building its own intellectual property portfolio for 15 years, and we will defend it vigorously, if necessary," said Fox.

Pre, which is based on a new operating system from Palm, is a highly-anticipated phone that analysts see as the company's only chance of fighting back against competition from Apple and other rivals, such as BlackBerry from Research in Motion .

Palm shares were down 33 cents or more than 4 percent at $7.51 in late morning on Nasdaq after falling as low as $7.15 earlier in the session.

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