San Diego Union-Tribune article on "A U.S. magistrate has ordered the chairmen of ..."
---------------------------------------------
In search of resolution
In rare move, court turns to two chairmen to settle wireless patent disputes
By Jennifer Davies
UNION-TRIBUNE STAFF WRITER
September 21, 2006
signonsandiego.com
A U.S. magistrate has ordered the chairmen of Qualcomm and Broadcom to sit down and try to settle an increasingly acrimonious legal battle over wireless patents.
Qualcomm's Irwin Jacobs and Broadcom's Henry Samueli must appear in court on Oct. 4 in San Diego to discuss their differences. The two companies have 10 lawsuits against each other.
U.S. Magistrate Anthony J. Battaglia said a “global resolution” was the best way to deal with the numerous disputes. He added that “it is clear that until the key principals meet with the court to discuss their ultimate objectives, and needs, settlement is not likely to occur.”
Eleanor Swift, a law professor at Boalt Hall at the University of California Berkeley, said that while judge-ordered settlement talks are common, they rarely include the top executives.
“That's pretty heavy duty,” she said. “The judge is sending a message that this deserves the attention of the very top people.”
The two companies have been wrangling with each other as Irvine-based Broadcom, a maker of chips for cable modems and set-top boxes, seeks to make wireless phone chips that would compete directly with Qualcomm.
Each side has alleged patent infringement, and Broadcom filed an antitrust suit last year against Qualcomm. On Aug. 31, a judge dismissed the antitrust case, saying Broadcom couldn't prove it claims of monopolistic behavior. Broadcom has said it will continue to pursue its antitrust claims.
As for a possible settlement, legal experts and analysts aren't optimistic. Michael Cohen, director of research for Pacific American Securities, said a conference with the judge isn't going to quickly resolve the dispute.
“There is such a gulf between the parties that a global settlement is less than likely in the near term,” he said.
That acrimony was evident as the two sides commented on the case.
“It's appropriate for the judge to approach the issues globally,” Qualcomm spokeswoman Christine Trimble said. Broadcom has “a long history of theft” of Qualcomm's trade secrets, she added.
Broadcom spokesman David Rosmann said in an e-mail, “Qualcomm's false and incredible accusations are unlikely to promote a constructive atmosphere for the mediation.”
University of San Diego law professor David McGowan said that all judges try to get parties to settle but that resolution isn't always possible.
“You can understand why he is doing it,” McGowan said, “but don't hold your breath.”
The key issue is patent positioning in next-generation wireless technology, called wideband code division multiple access, or W-CDMA, that cell phone makers increasingly using in their products. Qualcomm has long maintained that it has key patents for which wireless chip companies and cell phone makers must pay.
“It's all about not having to pay as much in royalties,” Cohen said.
Qualcomm has seen its royalties payments soar, tripling in the past five years. As demand for next-generation phones continues to grow, Qualcomm expects those rates to increase. For this year, the company estimated it would collect royalties on about 290 wireless phones worldwide, up from 210 phones in 2005.
Broadcom is hardly the only company that has taken issue with Qualcomm's patent position in W-CDMA. Nokia and Qualcomm are also squabbling over patent issues and six companies, including Nokia and Broadcom, have complained to European regulators over what they called the company's anti-competitive practices.
“It's the entire industry of that W-CDMA ecosystem that thinks Qualcomm is overly aggressive in their monetary compensation,” Cohen said, adding “Qualcomm thinks the rates they charge are reasonable and are unwilling to bend.”
Jacobs and Samueli founded and help build their respective companies into technology giants, making themselves billionaires in the process. Qualcomm, a San Diego wireless technology company, had revenue of $5.67 billion in the last fiscal year.
The Irvine-based Broadcom last year recorded chip sales of $2.67 billion, including those used in TV set-top boxes and wireless headsets.
--------------------------------------------------------------------------------
Bloomberg News contributed to this report.
--------------------------------------------------------------------------------
Jennifer Davies: (619) 293-1373; jennifer.davies@uniontrib.com |
