Trading Barnes & Noble Amidst Microsoft Lawsuit (MSFT, BKS, MMI, BGP, AAPL, NOK, ORCL)

Microsoft MSFT has unleashed more legal vendettas, this time against Barnes & Noble BKS for patent infringement. Microsoft claims that the Barnes & Noble Nook electronic reader runs on Google's GOOG Android operating system. Barnes & Noble is not the first company Microsoft has begun legal battles with; it has sued Motorola Mobility MMI over its Android phone handsets, according to the article. Microsoft also named Foxconn International and Inventec, Chinese and Taiwanese makers of the product, in the lawsuit against Barnes & Noble. While the e-book market has been mostly free of lawsuits, spats over the Android technology has led to several lawsuits, involving Apple AAPL, Nokia NOK, Oracle ORCL and HTC since the inception of the innovation. As the market continues to grow, the competitive and innovative edge becomes of increasing importance. E-book sales in January were up 115% from the same period one year ago. Clearly, the e-reader and its respective e-books are not fads that are likely to fizzle in the near future. Companies are now fighting to product their intellectual innovations to ultimately enable them to entice customers to choose their e-readers over others. What will the lawsuit mean for Barnes & Noble? Microsoft MSFT is a market superpower with plenty of cash and short-term investments which enable it to withstand the costs of a legal battle. Barnes & Noble, on the other hand, carries very low amounts of cash on hand and no short-term investments. How exactly is a legal battle going to work out for the struggling book retailer? The signs do not look promising. Investors may do well to consider the long-term future of Barnes & Noble and the possibility of it reaching a similar fate as Borders BGP, which fell into bankruptcy earlier this year. Coupled with the lawsuit initiated by Microsoft, is Barnes & Noble being kicked while it is down? The pessimistic investor might consider purchasing put options or selling short shares on the company during this difficult time. If Barnes & Noble does follow in Borders' footsteps, those put options may provide a nice yield. Neither Benzinga nor its staff recommends that you buy, sell, or hold any security. We do not offer investment advice, personalized or otherwise. Benzinga recommends that you conduct your own due diligence and consult a certified financial professional for personalized advice about your financial situation.