A U.S. District Court judge has upheld an earlier jury verdict that found Qualcomm guilty of willfully infringing on three mobile technology patents belonging to rival Broadcom. However, Judge Selna was compelled to reconsider his initial award of double damages and attorneys' fees to Broadcom in light of a change in the legal definition of "willfulness" issued by the U.S. Patent Appeals Court in an recent but unrelated case involving Seagate Technologies.
In the wake of the Seagate decision, Qualcomm had asked for a new trial on Broadcom's patent infringement charges. But Judge Selna elected to give Broadcom the opportunity to avoid a new trial by accepting his final decision.
Broadcom said it would accept the trimmed-down award of $19.6 million and also ask Judge Selna to issue an injunction that would prohibit Qualcomm from making, using, selling and developing 3G cellular chips that infringe on any of the disputed patents.
The War Over Patents
The ongoing battle in U.S. District Court for the Central District of California is merely the latest skirmish between Qualcomm and its mobile technology rivals. Along a parallel track, Nokia has terminated all chip royalty payments to Qualcomm and continues to pursue several legal avenues for challenging the validity of its rival's patents in Europe.
To date, the Finland-based handset maker has been unable to get the European courts to rule that a 2000 patent portfolio agreement between Qualcomm and chipmaker Texas Instruments means that Qualcomm's patents are exhausted with respect to TI's handset chips. On the other hand, antitrust regulators at the European Commission now say they will be intensifying their own investigation into Qualcomm's alleged practice of overcharging Nokia and five other cell-phone makers for certain patent licenses.
"The complaints allege that Qualcomm's licensing practices are not fair, reasonable and non-discriminatory and therefore may breach EC competition rules," said EC spokesperson Jonathan Todd. Though the EC's initiation of proceedings does not necessarily mean that the Commission has conclusive proof of any infringement, it does signify "that the Commission will conduct an in-depth investigation of the case as a matter of priority," Todd noted.
The Bottom-Line Impact
Qualcomm now says it expects to rack up more than $200 million in litigation expenses during its current financial year. Unless and until Qualcomm can achieve satisfactory settlements with Broadcom and Nokia, it expects to vigorously defend itself against further legal attacks as well as take whatever action is necessary "to ensure that Qualcomm remains well positioned to grow its business," said Qualcomm president Steve Altman.
Qualcomm also told financial analysts that its ongoing dispute with Nokia will negatively impact the company's earnings to the tune of 25 to 30 cents per share in the financial year currently underway.
"Throughout the past year, Qualcomm has attempted unsuccessfully to resolve our disputes with both Broadcom and Nokia," Altman told analysts earlier this month. "Although we continue to have settlement discussions with Nokia, I unfortunately have nothing new to report in terms of progress in these discussions," he said.
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