Qualcomm will appeal injunction won by Broadcom

January 3, 2008

Qualcomm cannot sell products with patents held by semiconductor manufacturer Broadcom

Wireless chip manufacturer Qualcomm Inc. admitted that the recent injunction won by rival Broadcom Corp. against its hardware and software will result in an “immediate, short-term impact” on the company.

Issued Dec. 31 by U.S. District Court Judge James V. Selna in California, the injunction against Qualcomm prevents the company from advertising, licensing, modifying, updating or selling 3G chips and technologies that were found to infringe three patents held by semiconductor manufacturer Broadcom Corp., Irvine, CA.

"The ITC order did not go nearly as far in prohibiting other activities from Qualcomm," said David Rosmann, vice president of intellectual property litigation with Broadcom, in a statement.

The order imposes an immediate injunction on Qualcomm’s WCDMA products for the U.S. market that were found to infringe the '686 video encoding patent.

The infringing chip sets are used to provide Internet access to mobile phones. Qualcomm said it hopes to introduce "workarounds" within the next few months to sidestep the infringed Broadcom patents before the end of March.

A provision in the ruling stays the injunction until Jan. 31, 2009 by providing Qualcomm a limited license subject to an ongoing royalty payment for its infringing QChat and1x/EV-DO products.

Dow Jones reported that the royalty rate for Broadcom's digital-video patent is 6 percent of the revenue Qualcomm receives, and the rate associated with the patent on using two networks was set at 4.5 percent.

A royalty rate for the third patent must be negotiated by both chip vendors.

Qualcomm issued a statement saying that it is reviewing the ruling and expects that further clarification from the court will be required.

The company also stated that it is considering the option of seeking appropriate stays and appeals, but will comply with all directives and orders of the court.

Neither company was available for further comment at the time of this report.