The key thing to realise here is that even though both companies have a formidable patent portfolio, it's not exactly clever for either company to go on a legal spree, waving patents around. "All you really need to know is that by suing Palm, Apple's putting its iPhone patents at risk, and that's an awful big ante," the attornies explain, "Same for Palm if it sues Apple and loses -- it stands the risk of losing its patents, and we'd bet it's making a tidy sum licensing at least some of them out to other companies."
It's something a lot of people have mentioned before: the software and hardware patent system is a house of cards. A lot of companies benefit from licensing deals for their patents, and suing a company would only expose their own patents as being rather useless. So, even though Apple and Palm might be infringing one another's patents, it doesn't have to mean that they're willing to start a big fight at the base of their house of cards.
Despite that, they don't think this case is just going to fade away, either. "More likely it's going to come down to whoever decides to blink first," Engadget writes, "and unless Palm decides to go out in a blaze of glory, files a declaratory judgment action and tries to preemptively invalidate Apple's patents, we'd say the first shot's going to come from Cupertino."