Qualcomm to Pay Broadcom $891 Million in Patent Settlement
Mon Apr 27, 2009 6:28 am
Wireless chip supplier Qualcomm has agreed to pay its competitor Broadcom $891 million dollars over four years to settle their long-standing and bitter legal disputes over technology patents.
San Diego, Calif-based Qualcomm had lost several patent infringement cases with smaller rival Broadcom in the last few years and said it plans to make its first payment of $200 million in the current quarter.
Irvine, Calif.-based Broadcom agreed to drop patent infringement claims filed against Qualcomm in the International Trade Commission, the European Commission and the Korea Fair Trade Commission.
Under the deal, both companies agreed to end their litigation and exchange rights to each others' intellectual property rights.
Broadcom is a major supplier of communications chips but is a newcomer to the wireless arena. The result is expected to help the company become a pivotal supplier of chips for handsets, a market in which Qualcomm holds a key role due to its control over significant patents.
One setback to Broadcom's expansion plans was the need to pay for patent licenses from Qualcomm. Qualcomm had invented some widely used wireless technologies and receives royalties from chip and handset makers that use third-generation, or 3G, networks.
To pressure Qualcomm to grant it favorable licensing terms, Broadcom filed multiple lawsuits against the company. In response, Qualcomm filed suits of its own against Broadcom.
Using a principle known as "patent exhaustion," Broadcom argued that Qualcomm didn't have the legal right to charge royalties for both handsets and the chips inside them.
Under the terms of the settlement, Broadcom will no longer have to pay Qualcomm for patent royalties on the chips it sells.
"At a time when the wireless industry should be focused on moving forward, the agreement removes uncertainty for Qualcomm and its customers," said Paul Jacobs, Qualcomm's chief executive.
Other terms of the agreement remain confidential under the deal.
