Sunday, March 18, 2007

Broadcom 2, Qualcomm 0

In January, Qualcomm lost a key patent infringement case to Broadcom. Last Friday — seven weeks later — most of the outstanding U.S. lawsuits between the two companies were settled out. Broadcom seems a lot more excited about the outcome than is Qualcomm, and two Broadcom complaints have not been dismissed.

As the UT’s Kathryn Balint notes, at one point the two companies were reasonably friendly. For that matter, the four major engineering schools in Southern California — at USC, UCSD, UCLA and UCI — are respectively named for Qualcomm founders Andrew Viterbi and Irwin Jacobs and Broadcom founder Henry Samueli (and Samueli). But then Broadcom went from being a Qualcomm licensee to a direct Qualcomm competitor.

The main thing is Broadcom is one of many companies that don’t want to pay Qualcomm’s royalties — one of six who asked the EU to cut the royalties they have to pay. This action remains unaffected.

There is no question that Broadcom’s 2007 successes will embolden other competitors to contest both the validity and price of Qualcomm’s IPR. Broadcom is less than a quarter the size of Qualcomm, but enemies (and legal warchests) like those of Nokia and Matsushita are more daunting. Qualcomm needs to win a major case or the rate of litigation will only increase.

Update: On Monday, Nokia filed a pre-emptive strike against Qualcomm’s European royalties, arguing that it shouldn’t have to pay royalties on phones with TI chips due to the 2000 cross-license between Qualcomm and TI.

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