UPDATE 3-U.S. appeals court favors Broadcom vs Qualcomm
(Adds comment from Qualcomm, Broadcom; updates shares)
By Diane Bartz
WASHINGTON, Sept 24 (Reuters) - Wireless chipmaker Broadcom Corp (BRCM.O) won a patent battle on Wednesday, as a U.S. appeals court affirmed that Qualcomm Inc (QCOM.O) infringed two patents used to make some of the world's most sophisticated cell phones and upheld an injunction.
The U.S. Court of Appeals for the Federal Circuit ruled in Qualcomm's favor on Wednesday in one of the three patents at issue, technology used in video compression in cell phones. It ruled that the patent was invalid and, thus, not infringed.
But the appeals court affirmed the judgment of infringement on two other patents "and the injunction as it pertains to those patents," according to the court ruling.
Following the ruling, Broadcom shares rose, closing $1.00 higher, or 5.4 percent, at $19.39, while Qualcomm shares ended down 62 cents, or 1.4 percent, at $45.29, both on Nasdaq.
Qualcomm -- often embroiled in legal disputes -- only recently settled a big case with phone maker Nokia (NOK1V.HE).
Many analysts, who see patent cases as negotiating tactics, expect Qualcomm and Broadcom to eventually reach a licensing agreement.
The two companies are in talks to settle patent battles now being fought in California, the International Trade Commission and in the federal appeals court, according to Alex Rogers, senior vice president and legal counsel. But he said, "I can't tell you that there's anything imminent."
David Rosmann, Broadcom's vice president for intellectual property litigation, said he also did not expect a quick settlement. "Over the past 3-1/2 years now we've engaged them on settlement discussions and we've never reached a point where we've resolved these issues," he said.
The federal circuit had been asked to reconsider a ruling made by a federal judge in California last year that wireless chip maker Qualcomm must stop selling high-speed wireless chips that infringe on Broadcom patents.
U.S. District Judge James Selna ruled that Qualcomm could keep selling some chips whose designs infringe three patents held by rival Broadcom through January 2009. Qualcomm must pay mandatory royalties to Broadcom for the chips it sells during the "sunset period" ending Jan. 31, 2009.
In August, Judge Selna ruled that Qualcomm was in contempt of his injunction because it had failed to pay royalties.
Qualcomm was also restricted to selling cellular chips it was offering as of May 29, 2007 -- when a Santa Ana, California, jury found that the company had infringed on the Broadcom patents -- and only to customers it had as of that date.
On Friday, Broadcom won a slender victory over Qualcomm as the appeals court vacated in part a ruling that Qualcomm was innocent of infringing a cell-phone patent. But the federal appeals court upheld a ruling by the International Trade Commission that Qualcomm did not infringe a second patent.
The lawsuit was originally filed in 2005 in Santa Ana, California.
"The Santa Ana case is one of several cases in which Broadcom continues to pursue claims against Qualcomm regarding patent infringement, anti-competitive behavior and fraud issues," Broadcom said in a press statement. "Qualcomm has either lost or withdrawn all of the patent infringement cases it brought against Broadcom."
Qualcomm's Rogers said no decision had been made about an appeal. "It is a relatively rare thing to do. Certainly we'll look at all of our options," he added. (Reporting by Diane Bartz, editing by Richard Chang, Gerald E. McCormick, Gary Hill)