U.S. Appeals Court Denies Qualcomm Request to Stay ITC Order

(Business News & Technology News, 14 Sep 2007)

The U.S. Court of Appeals for the Federal Circuit has denied a request by Qualcomm Inc. to stay the effectiveness pending appeal of a U.S. International Trade Commission (ITC) exclusion order that stops the importation into the United States of Qualcomm chips that infringe a Broadcom Corp. patent. The Federal Circuit also denied Qualcomm's request for a stay pending appeal as to "redesigned chips and products containing them."

The Federal Circuit did grant a stay pending appeal as to other parties whose cellular phones containing Qualcomm's infringing chips had been excluded. The Appeals Court made no findings questioning the validity of the patent or its infringement by Qualcomm.

The Appeals Court's ruling does not affect the ITC's Cease and Desist Order barring Qualcomm from bringing infringing chips into the U.S., or engaging in certain activities related to the infringing chips, affecting its ability to provide support to its customers for such essential services as designing next-generation mobile handsets, or supporting the testing and debugging of handsets. The infringing products include baseband processor chips that comprise Qualcomm's core suite of enhanced multimedia and convergence handset platforms.

"We are pleased that Qualcomm will not be permitted to continue its infringement of our patent while the appeal proceeds, either as to its original design or its purported redesign," said David A. Dull, Broadcom's Senior Vice President and General Counsel. "We look forward to an expedited process in the appeal, and believe that the stay will eventually be lifted for all parties."

Last year, an ITC administrative law judge, and later the ITC itself, found that Qualcomm's cellular baseband chips infringe five claims of U.S. Patent No. 6,714,983, which relates generally to power conservation in cellular phones. On June 7 the ITC issued its Final Determination on a remedy for Qualcomm's infringement. The ITC's remedy ordered that in addition to the Cease and Desist Order mentioned above certain Qualcomm chips, and future downstream products such as cellular phones that incorporate those chips that infringe Broadcom's patent be barred from importation into the U.S. On August 6, following a 60-day Presidential review process, U.S. Trade Representative Susan C. Schwab declined to disapprove the ITC order, which has been in effect since that date.

Other Litigation Against Qualcomm
The ITC case is one of several cases in which Broadcom continues to pursue its claims against Qualcomm regarding patent infringement, anti-competitive behavior and fraud issues. Qualcomm has either lost or withdrawn all of the patent infringement cases it brought against Broadcom.

Patent Infringement Cases
In addition to the ITC case, a unanimous federal jury in Santa Ana, Calif., earlier this year found that Qualcomm "willfully" infringed three Broadcom patents, and awarded Broadcom $19.64 million in damages for Qualcomm's past infringement. The federal judge in the case later ordered Qualcomm to pay double damages¡ª$39.3 million¡ªand Broadcom's attorney's fees in the case. Last month, the judge oversaw a hearing on Broadcom's request for a permanent injunction banning Qualcomm's infringing chips, and a decision is expected later this month.
In a separate case in San Diego, Calif., in a patent infringement case brought by Qualcomm against Broadcom, a unanimous jury found that Broadcom had not infringed, and the judge in the case subsequently found that Qualcomm engaged in "aggravated litigation misconduct" and "intentional abuse of industry standards bodies" in the case. Last month, a U.S. District Court Magistrate ordered 14 outside Qualcomm attorneys to appear at a hearing, now scheduled for Oct. 12, to address the issue of sanctions related to that misconduct.

Anticompetition Cases
In April 2007 Broadcom filed a complaint in California state court claims related to Qualcomm's abuse of the intellectual property rules of various industry standards-setting bodies. 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, and that Qualcomm's misconduct includes improperly concealing its patents, reneging on licensing obligations, and exerting dominance through hidden affiliations. A trial date has not been set.

In July 2005, Broadcom filed a complaint in New Jersey district court alleging that Qualcomm has violated U.S. antitrust laws by, among other things, encouraging standards bodies to incorporate Qualcomm patented technology into cell phone standards by promising to license those patents on fair, reasonable and non-discriminatory terms, and then reneging on those promises. Earlier this month, the U.S. Court of Appeals for the Third Circuit reversed a lower court's dismissal of Broadcom's claims, allowing the antitrust case to go forward. A trial date has not been set.

In October 2005, Broadcom 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 another wireless technology company have filed complaints similar to those filed in with European Commission before the Korean Fair Trade Commission.

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Qualcomm