Qualcomm barred from using Broadcom 3G in chipsets, software, Qualcomm readies work-around products
Certain WCDMA and new EV-DO products found to infringe Broadcom patents are enjoined outright; legacy EV-DO products may ship for limited period with royalties paid to Broadcom.
By Suzanne Deffree, Managing Editor, News -- EDN, January 2, 2008
Broadcom Corp scored one last legal victory in the final hours of 2007, when a federal judge issued an injunction prohibiting Qualcomm Inc from making, using, and selling certain chipsets and software that infringe the three Broadcom patents.
As ordered by U.S. District Court Judge James V. Selna, infringing WCDMA and new EV-DO products are enjoined outright, while legacy EV-DO products offered before May 29, 2007, may ship until January 31, 2009, with royalties paid to Broadcom.
Specifically, the ruling will impact Qualcomm 3G WCDMA and EV-DO chips in its "Enhanced Multimedia" and "Convergence" platforms, as well as its QChat "push-to-talk" software.
The Broadcom's U.S. patents ruled to be infringed are numbers 6,847,686; 5,657,317; and 6,389,010. A Santa Ana, Calif., federal jury ruled on the infringement in May 2007, awarding Broadcom $19.64 million in damages. The damages award had been doubled to $39.3 million in August because the infringement was found to be "willful,” however that decision was later reversed.
Broadcom had originally filed the lawsuit in 2005, alleging that five of its patents had been infringed. During the course of the litigation, Broadcom dismissed one patent, and the court stayed the case with respect to a second patent.
"We are very pleased with [the] ruling, which addresses Qualcomm's improper use of our patented technology covering cellular chips and software for advanced consumer devices," said David A. Dull, Broadcom's senior VP and general counsel, in a statement Monday. "Broadcom should not have to compete against companies that use Broadcom's own patented technology against us, and this injunction puts a stop to Qualcomm doing just that."
In its own statement this morning, Qualcomm said it is attempting to “obtain further relief and clarity” from the courts on certain aspects of the order and warned that “the inability to obtain such relief will likely have an immediate, short-term impact as handset customers transition to new designs for WCDMA products relating to the '686 patent, medium-term impact to certain products in the development pipeline for the U.S. market, and longer-term ability to implement work-arounds in time for commercial availability of handsets by the January 2009 sunset expiration.”
Qualcomm further said it is evaluating all of its options, including seeking stays and appeals, and that it will comply with all directives and orders of the court.
In a research note this morning, Wall Street watchers at Lehman Brothers noted that the ruling relates to the U.S. market and would not impact key WCDMA/CDMA -DO markets such as Europe, Korea, Japan and India.
The firm also said that while Qualcomm will use the 13 month period of royalty payments to continue to develop its work-around solutions, such solutions may be challenging and the injunction on new EV-DO products may impact Qualcomm’s ability to introduce new offerings and secure new customers.
Lehman also said it believes Broadcom may seek to argue that the royalties should be applied to all Qualcomm’s revenues associated with the patents including the licensing and royalty revenues along with the chips.
The patent case is just one of many legal battles the two communications companies are involved in. Among other issues, Broadcom has made antitrust claims against Qualcomm and the two companies are further embattled in an International Trade Commission (ITC) fight that has seen a third-party importation ban put into affect and then removed against certain mobile phones that include Qualcomm chips found to infringe Broadcom power-saving technique patent.
“We believe the ruling may ultimately lead both parties to seek a settlement in their long standing litigation,” Lehman concluded.
