Qualcomm, Broadcom Settle Bitter Infringement Feud

Rival Southern California chip makers to drop all litigation against each other while Qualcomm agrees to pay Broadcom $891 million over the next four years.

Chip makers Qualcomm and Broadcom settled their bitter, long running patent feud April 23 with an agreement that pays Broadcom $891 million over a four-year period with a first payment of $200 million by June 30. According to the terms of the settlement, Qualcomm and Broadcom agreed to terminate all complaints and litigation against each other.

Since 2005, the two Southern California firms have asserted patent infringement claims against each other in a broad range of venues, including the courts, the International Trade Commission, the European Commission and the Korea Fair Trade Commission. The core of the complaints centered around 3G and 4G chips for cell phones.
"Today's settlement allows both companies to move on with their business and compete in the semiconductor sector as two of its innovation leaders," Broadcom President and CEO Scott A. McGregor said in a statement. "We have set aside our differences while addressing the needs of our customers, our shareholders and the industry. In addition, the companies have worked together to achieve their mutual goals of improving the competitive dynamics of the industry."
The deal also bars Broadcom from asserting patent rights against Qualcomm's customers, particularly for integrated circuits incorporated into cellular products. Qualcomm also agreed not to assert its patent rights for Broadcom's integrated circuits. Additionally, Qualcomm's customers do not receive rights to any of Broadcom's patents with respect to Qualcomm integrated circuit products incorporated into non-cellular products and equipment.
"The settlement will allow us to direct our full attention and resources to continuing to innovate, improving our competitive position in this economic downturn, and growing demand for wireless products and services," Paul E. Jacobs, chairman and CEO of Qualcomm, said. "I am pleased that we have achieved this important settlement. At a time when the wireless industry should be focused on moving forward, the agreement removes uncertainty for Qualcomm and its customers."
In May 2007, Qualcomm won an infringement decision against Broadcom from the International Trade Commission banning the import of new cell phones carrying Qualcomm 1xEV-DO and WCDMA chipsets that Broadcom claimed infringed on its patents. The decision was later overturned by a federal appeals court.