Broadcom’s $19.6M jury award could spark cross-licensing pact

To Broadcom Corp., a favorable federal jury verdict last week in a patent infringement lawsuit against arch-rival Qualcomm Inc. was “gratifying.” That’s understandable, as the decision vindicated Broadcom’s position in the case-at least for now-and came with a $19.6 million award, which could be tripled by a penalty verdict due June 18, based on the jury’s finding that Qualcomm’s action was willful.
Qualcomm, predictably, was not gratified by the outcome-its reaction had a defiant, aggressive tone. It said after the verdict it continued to reject the validity of Broadcom’s patents, the jury’s verdict that it had infringed on those patents and that it had done so willfully. Qualcomm plans to seek reversal of the decision through post-trial motions or, if necessary, on appeal, according to Lou Lupin, the vendor’s general counsel.
For semiconductor analyst Will Strauss, principal at Forward Concepts, the single case at hand is simply so much theater.
“You can’t string a wire across a single chip without violating someone’s intellectual property,” Strauss said. “I don’t see any real impacts on the chip industry. In the end, Broadcom and Qualcomm will have to trade some IP licenses.”
Strauss said that patent infringement cases were a perennial aspect of the landscape, given the pace of innovation and parallel lines of technology development in the semiconductor industry’s effort to meet the mobile industry’s needs.
“Great minds can invent the same damn thing,” Strauss said.
As for any psychological effect a verdict against Qualcomm might have, given that an array of wireless players have numerous legal and regulatory issues pending with or against the San Diego-based chip and IP licensing firm, Strauss said: “The overall perception of Qualcomm as a company determines its stock value.”
For its part, Qualcomm’s executives have said recently that the company is willing to endure some “overhang” on its stock value in the near-term as various court battles are resolved, confident of future vindication of its IP licensing business.
Last week, Broadcom said the jury verdict “is the latest in a series of favorable court and governmental decisions for Broadcom in its ongoing battles with Qualcomm over patent infringement issues.” It noted that, among the raft of legal matters, it currently faces no actions against it by Qualcomm.
“We continue to believe that none of the Broadcom patent claims are valid or were infringed by Qualcomm,” Lupin retorted, via press release. “We will challenge the jury’s findings.”
Mark McKechnie, analyst with American Technology Research, said the verdict improves Broadcom’s negotiating position in licensing agreements with Qualcomm. Though Qualcomm is developing a work-around with respect to a patent infringement issue before the U.S. International Trade Commission in which Broadcom has also prevailed, McKechnie sees no such solution to the three patents cited in the verdict.
The next dates in the Broadcom-Qualcomm saga include this Thursday, when the ITC is due to render its decision on a remedy for its finding that Qualcomm infringed one of Broadcom’s patents. Broadcom seeks a “downstream” remedy that would ban importation of handsets containing its patent in Qualcomm’s W-CDMA chips. AT&T Inc., among other parties, have submitted testimony on the potential disruption such a solution might cause to the wireless industry. A June 18 hearing has been set in the federal jury case to consider Broadcom’s request for a permanent injunction against Qualcomm.