UPDATE 2-Qualcomm found in contempt on Broadcom patent fight

(Recasts with Qualcomm comments, background)

NEW YORK, Aug 28 (Reuters) - Qualcomm Inc QCOM.O has been ordered by a court to pay Broadcom Corp BRCM.O gross profits from its QChat walkie-talkie products after it was found in contempt of an injunction in a dispute over Broadcom patents, the companies said on Thursday.

U.S. District Judge James Selna found Qualcomm violated an injunction related to chips used in phones with high-speed Web links, and that it failed to pay royalties to Broadcom for its walkie-talkie feature QChat, used by Sprint Nextel Corp S.N, the No. 3 U.S. mobile service.

“We respect the order and will immediately comply and at the same time we’ll move forward with an appeal,” said Alex Rogers, senior vice president and legal counsel for Qualcomm.

The court gave Qualcomm 30 days to calculate the amount and make the payment to Broadcom so Rogers said it was too soon to estimate how much it owed Broadcom under the order.

He said revenue from QChat, which went live at Sprint this year, was not anywhere near as much as Qualcomm’s chip or technology license revenue. In July, Qualcomm forecast revenue of more than $10 billion for its fiscal year ending in September.

According to a court document obtained by Reuters, Qualcomm received more than $93 million in QChat payments from Sprint since the injunction ruling.

A jury found in May last year that Qualcomm had infringed three Broadcom patents and it awarded $19.64 million in damages for past infringement in the case Broadcom had filed in U.S. District Court in Santa Ana, California, two years before.

Qualcomm said the ruling would not interrupt sales of its WCDMA wireless chips as it had already put a new design in place for new products at the beginning of this year in time to meet injunction requirements.

But, Qualcomm said, it was found to have violated the injunction by continuing to service and support WCDMA products made and sold between the date of the trial verdict in May last year and the date of the injunction on Dec. 31, 2007.

Qualcomm said it interpreted the order as requiring it to pay royalties on such products and continued to provide service and support under that interpretation. But the court disagreed and as a result Broadcom will have to return the royalty payments, Qualcomm explained.

Qualcomm said its employees would have to stop using phones with the WCDMA chips in question.

Broadcom said in a statement that the court had reserved determination of whether Qualcomm should also be held in contempt for post-injunction offers to sell infringing chips based on , pending additional discovery and proceedings.

Broadcom said that as well as owing it gross profits from QChat, the judge also ordered Qualcomm to pay Broadcom’s attorneys fees in connection with contempt proceedings.

“Qualcomm’s conduct demonstrates a startling lack of respect for its competitors’ intellectual property, industry standards-setting processes, and the courts,” David Rosmann, Broadcom’s vice president for intellectual property litigation, said in the statement.

Broadcom declined to comment beyond its statement. (Reporting by Sinead Carew; editing by Braden Reddall)