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Two big rivals in the mobile handset industry ink agreement to collaborate on technology by cross-licensing patents.

Cross-licensing seems to be a significant corporate strategy these days. Microsoft and Toshiba entered into an agreement earlier in 2005 to cross-license their patents. LG and Matsushita have a similar contract in place, and Samsung has another agreement in effect with Sony.

By cross-licensing, the companies get to use each other's technology and research and development efforts. This helps both sides cut costs when developing new features.

If one cross-licensed partner has a feature that the other partner has been trying to develop in parallel, the new partner can adapt the existing technology to their own needs, in accordance with the agreement.

The agreement also frees up the pair from the potential for legal action against each other. Sometimes, the agreements exist between companies solely to avoid litigation over a particular piece of technology. Many times, the specific technology covered by the terms of the agreement does not get disclosed publicly.

Motorola and Samsung chase Nokia in the competitive world of handsets. Nokia leads second place Motorola by a wide margin, but Samsung has been catching up to them. The agreement may help both makers erode more of Nokia's dominant market share.

David Utter is a staff writer for WebProNews covering technology and business. Email him here.