Broadcom Charges Qualcomm with Unfair Competition, Fraud and Breach of Contract

(Business News & Technology News, 16 Apr 2007)

Broadcom Corp. has commenced new litigation against Qualcomm Inc. asserting that Qualcomm's conduct before prominent industry standards organizations violates California law.

In a 37-page complaint filed late Thursday in California Superior Court in Orange County, Broadcom asserts that Qualcomm's misconduct before standards setting bodies includes improperly concealing its patents, reneging on licensing obligations, and exerting dominance through hidden affiliations. The complaint alleges that Qualcomm has engaged in a pattern of misconduct across multiple technologies and multiple standards bodies, including those responsible for setting cellular, video, and mobile broadband standards. Broadcom maintains that this misconduct constitutes fraud, breach of contract, and violation of California's unfair competition statute.

San Diego, Calif.-based Qualcomm claims that other industry participants require licenses to its patent portfolio because its patents allegedly cover various telecommunications and other industry standards.

In its complaint, Broadcom cites numerous instances of improper conduct by Qualcomm relating to industry standards bodies, including two recent and public ones: On March 22, the U.S. District Court in San Diego adopted a unanimous jury finding that Qualcomm violated its duty to disclose patents to the international organization that developed the H.264 video compression standard. That court is scheduled to hold a hearing on the proper remedy for Qualcomm's violation on May 2. Separately, in June 2006 the Institute of Electrical and Electronics Engineers (IEEE) suspended its 802.20 standards working group, which had been developing a "4G" wireless communication standard, after an investigation revealed that Qualcomm covertly dominated that group by hiring working group members who did not disclose their affiliations with Qualcomm.

"We now know that Qualcomm has been playing games with industry standards processes for years, leaving both consumers and competitors like Broadcom to pay a heavy price," said David A. Dull, Broadcom's Senior Vice President and General Counsel. "Our goal is to put a stop to this improper behavior and force Qualcomm to play by the same rules that apply to its competitors as well as its own customers."

The relief Broadcom seeks from Qualcomm in the lawsuit includes disgorgement of profits, restitution, compensatory and punitive damages, and a permanent injunction barring Qualcomm from seeking to enforce certain cellular, video, and mobile broadband patents against Broadcom or Broadcom's customers.

Additional Actions
While Qualcomm has either lost or dismissed all of its patent infringement claims against Broadcom, Broadcom continues to pursue various claims against Qualcomm. Last fall, a United States International Trade Commission (ITC) judge ruled that Qualcomm's cellular baseband chips infringe five claims of a Broadcom patent. The full Commission affirmed that ruling in December and is expected to issue a decision May 8 on the appropriate remedy for Qualcomm's infringement. Beginning May 1, the U.S. District Court in Santa Ana, Calif. is scheduled to try Broadcom's claims that Qualcomm infringes three additional Broadcom patents relating to cellular technology.

Separately, in other actions, Broadcom has joined five other leading mobile wireless technology companies in filing complaints with the European Commission alleging that Qualcomm has engaged in anticompetitive conduct in the licensing of its patents and the sale of its chipsets for mobile wireless devices and systems. The six companies assert that Qualcomm is violating EU competition law and failing to meet the commitments it made to international standards bodies to license its technology on fair, reasonable and non-discriminatory terms. Broadcom and other wireless technology companies have filed similar complaints before the Korean Fair Trade Commission.

Broadcom