Broadcom Hails Ruling
In a case pending in federal court in San Diego, Calif., QUALCOMM had sought a preliminary injunction to stop Broadcom's development and sale of 3G cellular chips, alleging trade secret misappropriation. U.S. District Court Judge Rudi M. Brewster late this afternoon ruled that QUALCOMM was not entitled to the sweeping injunction it requested. The judge characterized QUALCOMM's requested relief as "light years beyond" what would be appropriate. QUALCOMM also withdrew its false allegations against Broadcom of software theft and three sworn declarations supporting those false allegations. As a compromise, Broadcom and QUALCOMM are to agree on a set of documents to be quarantined pending the outcome of the case. Broadcom has not misused any QUALCOMM trade secrets, so any such quarantine will have no effect on Broadcom's business. Broadcom is confident that the court will ultimately find that it did not misappropriate QUALCOMM's trade secrets. Trial of the case is set for October 2007.
"Let's be clear: QUALCOMM brought this motion not because of any legitimate concern over trade secrets, but as yet another effort to stifle competition in the cellular chip market. QUALCOMM obviously perceives Broadcom to be a serious competitive threat," said David A. Dull, Broadcom's Senior Vice President and General Counsel. "We are gratified that the court rejected QUALCOMM's sensational and false claims."
Royalty "Double-Dipping" Challenged
In a separate case pending between the parties in the same court, Broadcom has filed a motion for summary judgment aimed at stopping QUALCOMM's anticompetitive practice of seeking multiple patent royalties for the same products and patents. Unlike traditional semiconductor companies, QUALCOMM collects royalties not only from its chip competitors, but also from their customers as well as its own customers. Broadcom's motion, filed Friday, asserts that such "double-dipping" from both cellular chipmakers and handset providers for royalties on the same patents amounts to patent misuse, rendering QUALCOMM's patents unenforceable. As a consequence, QUALCOMM may have to significantly alter the manner in which it collects patent royalties and bring its patent licensing program into line with traditional cross-licensing practices in the semiconductor industry.
New Jersey Antitrust Appeal
Finally, on Friday Broadcom appealed last month's dismissal without prejudice of its federal antitrust lawsuit against QUALCOMM. The dismissal, by a U.S. District Judge in New Jersey, was appealed to the U.S. Court of Appeals for the Third Circuit. Broadcom believes the New Jersey judge's decision was based on an incorrect reading of antitrust law and is directly at odds with established precedent and with the recent unanimous decision of the U.S. Federal Trade Commission in the Rambus, Inc. matter. In an August 2 ruling, the FTC found that memory-maker Rambus' abuse of an industry standards-setting process constituted a violation of the antitrust laws.(1)
"QUALCOMM is recognized globally for its unfair and anticompetitive practices, including reneging on promises to license its patents on fair, reasonable and non-discriminatory terms and stacking industry standard-setting bodies with members having hidden QUALCOMM affiliations who are committed to rubber-stamping its technology," said Mr. Dull. "These practices not only hurt cellular component providers, handset manufacturers and carriers, but ultimately hurt the consumer as well by raising the cost of cellular phones and chilling the development of innovative technology by the industry."
"For well over a year, we have been asking QUALCOMM simply to play by the rules, and allow chipmakers and handset providers to compete fairly on a level playing field," Mr. Dull continued. "We are open to a resolution of our disputes which achieves that objective and properly recognizes the value of Broadcom's own large and fast growing intellectual property portfolio."
Status of Patent, ITC and Other Actions Brought by Broadcom
In total, Broadcom has asserted that QUALCOMM products infringe eighteen U.S. patents. An initial determination from the U.S. International Trade Commission on whether QUALCOMM infringes three of those patents is expected October 10. The ITC staff has recommended a finding of infringement and a remedy that would halt the importation of infringing QUALCOMM chips and cell phones containing those chips. QUALCOMM will face trial on two more of the Broadcom patents in March 2007 in San Diego, and on five more in May 2007 in Santa Ana, Calif.
In October 2005 Broadcom and five other leading mobile wireless technology companies filed complaints with the European Commission requesting that the Commission investigate QUALCOMM's anticompetitive conduct related to the licensing of its patents and the sale of its chipsets for mobile wireless devices and systems. The EC commenced a preliminary investigation, and is determining whether to institute a formal investigation, of QUALCOMM. A decision is expected later this year.
In June 2006 Broadcom and another leading mobile wireless technology company filed complaints with the Korean Fair Trade Commission asserting claims comparable to those asserted in the EC. The Korean FTC is determining whether to institute a formal investigation of QUALCOMM.
Broadcom Corp. (Nasdaq: BRCM)