(Adds comment from Qualcomm, Broadcom; updates shares)
By Diane Bartz
WASHINGTON, Sept 24 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
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
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,
"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)