Broadcom, Qualcomm settle patent disputes

The two companies announce a settlement that will, among other terms, see Qualcomm fork out US$891 million to Broadcom over a period of four years.
Written by Vivian Yeo, Contributor

Rival chipmakers Broadcom and Qualcomm have reached a settlement in their patent clashes that have stretched several years.

Under the agreement, Qualcomm will pay Broadcom US$891 million over a period of four years, of which US$200 million will be paid by the end of June, according to a joint statement issued Tuesday.

The settlement effectively dismisses all litigation between Broadcom and Qualcomm, including patent infringement claims filed with the International Trade Commission (ITC) and U.S. District Court in Santa Ana, the companies said. In addition, Broadcom will also withdraw its complaints to the European Commission and the Korea Fair Trade Commission.

While there were confidential clauses in the agreement, what was spelt out was that Broadcom and Qualcomm have agreed not to assert patents against each other for their respective integrated circuit products and certain other products and services. Neither will they assert their respective patents against each other's customers--relating to Broadcom's integrated circuit technology incorporated in non-cellular products, and likewise for Qualcomm's integrated circuit technology incorporated into cellular products.

The two companies said the terms of the agreement will not result in any change to Qualcomm's 3G licensing revenue model.

In the joint statement, the chiefs of both companies noted that the resolution was a positive one not just for Broadcom and Qualcomm, but also their customers, partners and the industry.

Scott A. McGregor, president and CEO of Broadcom, explained: "We have set aside our differences while addressing the needs of our customers, our shareholders and the industry. In addition, the companies have worked together to achieve their mutual goals of improving the competitive dynamics of the industry."

Paul E. Jacobs, chairman and CEO of Qualcomm, said he was pleased that the "important settlement" had been reached. "The settlement will allow us to direct our full attention and resources to continuing to innovate, improving our competitive position in this economic downturn, and growing demand for wireless products and services."

Jacobs added the agreement removed uncertainty for Qualcomm and its customers "at a time when the wireless industry should be focused on moving forward".

The legal dispute between the two companies began in 2005, when Broadcom claimed that Qualcomm infringed 10 of its patents related to wired and wireless communications and multimedia processing technologies.

Broadcom last sued Qualcomm in October 2008, alleging that the company's sales and licensing practices amounted to patent misuse.

Broadcom has been said to have benefited from the patent suits, as the import ban on some phones using 3G chipsets from Qualcomm by the ITC in 2007 had unnerved some carriers and handset manufacturers.

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