Broadcom to Receive $19.6 Million from Qualcomm for Patent Infringement

Broadcom Corporation (Nasdaq: BRCM), a global leader in semiconductors for wired and wireless communications, announced that a unanimous federal jury today found that certain Qualcomm Incorporated (Nasdaq: QCOM) cellular baseband chips and software infringe claims of three Broadcom patents, and awarded Broadcom $19.64 million in damages for Qualcomm’s past infringement.

The jury of six women and three men, sitting in U.S. District Court in Santa Ana, Calif., also found that the three patents are valid and that Qualcomm’s infringement was willful, allowing the court to increase the damages up to three times the amount awarded by the jury.

Broadcom plans to ask the court to issue a permanent injunction barring Qualcomm from further infringement of the three patents.

“We are very pleased with the jury’s verdict, and gratified that the jurors were able to absorb and evaluate very technical material and arrive at the conclusion that Qualcomm once again is improperly utilizing our patented technology covering cellular baseband solutions,” said David A. Dull, Broadcom’s Senior Vice President and General Counsel. “Broadcom was an early pioneer in a broad range of wired and wireless communications and multimedia technologies, which are at the heart of the convergence and communications trends that are touching consumers in their daily lives. Broadcom’s patents are our company’s lifeblood, representing substantial financial investment and the hard work and innovations of our engineers around the world. We are heartened that the legal system has provided redress for Qualcomm’s infringing behavior.”

The three patents include:

  • U.S. Patent No. 5,657,317, which relates generally to simultaneous participation on two networks using a single transceiver. As cellular standards continue to proliferate and evolve, cellular phones have become multimodal, allowing access to the newest standards while maintaining backward compatibility. The jury found that Qualcomm has used the multimode inventions of the ’317 patent in its EV-DO baseband chips.
  • U.S. Patent No. 6,847,686, which relates generally to a chip architecture for performing video processing. As technology continues to converge into cellular phones and other mobile devices, consumers expect higher levels of video performance. The jury found that Qualcomm has used Broadcom’s patented architecture for providing this increased video performance in its “Enhanced Multimedia” and “Convergence” chip platforms.
  • U.S. Patent No. 6,389,010, which relates generally to a phone that may be used to place calls over fixed or variable bandwidth networks. A ‘push-to-talk’ feature on a cell phone gives the user the choice of making a ‘walkie-talkie’ type connection instead of a traditional cell phone call. The jury found that Qualcomm uses the invention of the ’010 patent in its QChat(R) software.

Tuesday’s verdict, following a 13-day trial and two and a half days of deliberations, is the latest in a series of favorable court and governmental decisions for Broadcom in its ongoing legal battles with Qualcomm over patent infringement issues. In December 2006, the U.S. International Trade Commission (ITC) found that Qualcomm’s third generation, or 3G, cellular baseband chips infringe a Broadcom patent related to power-saving technology. A decision on the appropriate remedy for that infringement is expected by June 7. Today’s jury findings confirm that Qualcomm’s infringement of Broadcom’s large and growing patent portfolio is widespread and pervasive.

In January 2007, a unanimous jury in San Diego federal court determined that Broadcom does not infringe two Qualcomm patents related to video compression. The judge in that case then decided that Qualcomm had waived its right to enforce the patents by failing to comply with its obligations to the applicable industry standards body. A hearing on the appropriate remedy for Qualcomm’s conduct in the video compression case is set for June 25.

Separately, Broadcom recently filed a complaint against Qualcomm asserting unfair competition, fraud and breach of contract claims related to Qualcomm’s abuse of the intellectual property rules of various industry standards setting bodies. The complaint alleges that Qualcomm has engaged in a pattern of misconduct across multiple technologies and multiple standards bodies, including those responsible for setting cellular, video, and mobile broadband standards, and that Qualcomm’s misconduct includes improperly concealing its patents, reneging on licensing obligations, and exerting dominance through hidden affiliations.

Broadcom has joined five other leading mobile wireless technology companies in filing complaints with the European Commission alleging that Qualcomm has engaged in anticompetitive conduct in the licensing of its patents and the sale of its chipsets for mobile wireless devices and systems. The six companies assert that Qualcomm is violating EU competition law and failing to meet the commitments it made to international standards bodies to license its technology on fair, reasonable and non-discriminatory terms. Broadcom and other wireless technology companies have filed similar complaints before the Korean Fair Trade Commission. Broadcom is also appealing last year’s dismissal 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. The appeal is scheduled to be heard June 28.

Following the filing of Broadcom’s patent infringement and antitrust actions, Qualcomm responded by filing a number of complaints against Broadcom. However, Qualcomm either lost or settled all of those claims, so Broadcom currently faces no actions against it by Qualcomm.

The proceedings instituted by Broadcom against Qualcomm come at a time when the cellular phone industry is transitioning from providing voice-only services to offering customers an array of multimedia services, including a wide variety of audio, video, data and communications capabilities. Among the multimedia features now offered to consumers are TV, MP3 capabilities, personal video recording (PVR), VoIP, and the ‘push-to-talk’ feature, which enables users to use their cellular phones like walkie-talkies. Consumer demand for these features is driving the next upgrade cycle in networks and cellular phones.

Broadcom is in the vanguard of the transition to feature-rich cellular phones. Its products incorporate many innovative technologies such as Bluetooth(R), Wi-Fi(R), third generation (3G) cellular baseband, multimedia processing, VoIP and security, all protected by an extensive intellectual property portfolio.

About Broadcom
Broadcom Corporation is a major technology innovator and global leader in semiconductors for wired and wireless communications. Broadcom products enable the delivery of voice, video, data and multimedia to and throughout the home, the office and the mobile environment. We provide the industry’s broadest portfolio of state-of-the-art, system-on-a-chip and software solutions to manufacturers of computing and networking equipment, digital entertainment and broadband access products, and mobile devices. These solutions support our core mission: Connecting everything(R).

Broadcom is one of the world’s largest fabless semiconductor companies, with 2006 revenue of $3.67 billion, and holds over 2,000 U.S. and 800 foreign patents, more than 6,000 additional pending patent applications, and one of the broadest intellectual property portfolios addressing both wired and wireless transmission of voice, video and data. Broadcom is headquartered in Irvine, Calif., and has offices and research facilities in North America, Asia and Europe. Broadcom may be contacted at +1.949.926.5000.

Broadcom(R), the pulse logo, Connecting everything(R), and the Connecting everything logo are among the trademarks of Broadcom Corporation and/or its affiliates in the United States, certain other countries and/or the EU. Qualcomm(R) and QChat(R) are trademarks of Qualcomm Incorporated. Bluetooth(R) is a trademark of the Bluetooth SIG. Wi-Fi(R) is a trademark of the Wi-Fi Alliance.