Qualcomm brings bitter patent battle to an end

 

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By Reuters

Posted on 27 Apr 2009 at 09:31

Qualcomm has agreed to pay Broadcom $891 million in royalties, as one of the industry's longest and bitterest patent battles comes to an end.

The sum will be paid over four years, with an initial $200 million being paid this quarter.

The settlement will result in the dismissal of all litigation between the companies, including patent infringement claims Broadcom brought against Qualcomm at the International Trade Commission in 2005. Broadcom will also withdraw its complaints to the European Commission and the Korea Fair Trade Commission as part of the deal.

The companies also agreed not to assert patents against each other for their respective chip products and certain other products and services.

However, the settlement does not necessarily mean that the Korean and European regulators will drop their investigations though Qualcomm general counsel Donald Rosenberg hopes they will look favorably on the settlement.

Spiralling costs

Rosenberg says Qualcomm decided to settle as legal bills mounted with no clear end in sight: "The goal here is to eliminate the need for litigation Going forward."

Rosenberg also says he was worried that a recent a ruling in the companies' Santa Ana case had the potential to widen the scope of an injunction against Qualcomm on the sale of products that were found to infringe on a Broadcom patent.

The worry was that it could have ended up disrupting customers, which include cellphone makers and wireless network operators.

"We'd become increasingly troubled by some of the court's rulings in that case that we felt threatened to broaden the scope of the injunction," he says. "The strongest element was the desire on both our parts to focus on our businesses."

Charter Equity Research analyst Ed Snyder says it makes sense for Qualcomm to end the legal uncertainty despite the big payout: "It's clearly costing Qualcomm a lot but it's best for both companies to move on. It's a win for Broadcom."