Qualcomm: Broadcom injunction may cost it $2.4 bln
Wed Aug 15, 2007 6:40PM EDT
reuters.com
SANTA ANA, Calif., Aug 15 (Reuters) - An injunction sought by Broadcom Corp (BRCM.O: Quote, Profile, Research) in federal court had "the potential for significant harm" to Qualcomm Inc (QCOM.O: Quote, Profile, Research), Qualcomm co-founder and Chairman Irwin Jacobs testified on Wednesday.
The proposed injunction, calling for Qualcomm to stop making chips that a jury found in May infringed three Broadcom patents, could cost it $2.4 billion over five years, Qualcomm said in documents filed this month with the federal court in Santa Ana, California.
Amid just the latest legal battle between the chipmaking rivals, Qualcomm shares fell 4.5 percent on Wednesday.
Last week, Judge James Selna doubled the amount the jury awarded against Qualcomm to $39.3 million and told it to pay Broadcom attorneys' fees, citing willful patent infringement.
On the second day of the penalty phase hearing, Jacobs said he believed Qualcomm General Counsel Lou Lupin was "not correct" when he told the news media in May that the verdict would have "little effect" on the company. "Qualcomm would be harmed very substantially," Jacobs said.
Qualcomm said earlier this week that Lupin had resigned from the company for personal reasons, effective immediately.
Jacobs said Qualcomm had not attempted to find alternatives to the infringing chips while the case was being litigated.
"I'm not sure the impact reached me and I did not take any steps," said Jacobs, who gave up the chief executive job to son Paul Jacobs in mid-2005, shortly after the lawsuit was filed.
Jacobs also said that an 18-month phase-out period proposed by Broadcom, during which Qualcomm would be allowed to keep selling the disputed chips in exchange for a royalty while it completes a redesign, "may or may not" be enough time.
In place of an injunction, Qualcomm said in an Aug. 2 document filed with the court that it offered to pay Broadcom three times a royalty rate model that the jury used in May to calculate damages. As a result Broadcom would suffer "no hardship" for lack of an injunction, whereas a ban would cost Qualcomm $2.4 billion in revenue over five years, it said.
"Given that utterly lopsided balance, whether (Qualcomm) can absorb the substantial cost without going bankrupt is besides the point," the document said.
Qualcomm has forecast revenue of up to $8.8 billion for its fiscal year ending in September.
A Broadcom witness on Wednesday attacked the Qualcomm counter-proposal as harmful for Broadcom's bid to enter the U.S. cell phone market, in which Qualcomm is well established.
"Broadcom is a relatively new entry into the market ... They are going to be competing in the future for the same customers," damages expert Michael Wagner told the court.
The patents in the case cover video compression for mobile phones, walkie-talkie-style technology, and simultaneous communication between different types of networks. A ruling is not expected until September, lawyers from both sides said.
In another patent infringement case between Broadcom and Qualcomm, the U.S. International Trade Commission on June 7 banned the U.S. sale of some phones using Qualcomm chips found to infringe a Broadcom patent.
Last week, the Bush administration said it would uphold the ITC ban after a 60-day review. Verizon Wireless, which depends on phones with Qualcomm chips, agreed last month to pay up to $200 million in license fees to Broadcom to avoid the ITC ban.
Also on Wednesday, Qualcomm filed court documents accusing Broadcom of destroying evidence related to the case. A lawyer for Broadcom said the accusation related to drafts of an agreement it made with Verizon Wireless, a venture of Verizon Communications (VZ.N: Quote, Profile, Research) and Vodafone Group Plc (VOD.L: Quote, Profile, Research).
Last week, in yet another patent case, a federal judge ruled that Qualcomm had waived its rights to enforce two patents asserted against Broadcom because it had concealed documents and patents. Qualcomm said it would appeal.
© Reuters 2007. All rights reserved.
More Market News
UPDATE 2-Petsmart posts higher second-quarter profit
NetApp revenue outlook tops Street
UPDATE 4-Macy's posts lower profit, cuts outlook
UPDATE 2-Salesforce makes 2nd-qtr profit after yr-ago loss
More Market News...Business Blog Posts
Immersive Media exec beefs up holdings – Insiders
FP Trading Desk
S&P 500: Down For the Year
Ticker Sense
Through The Fly's Eyes: AirTran & Midwest Airlines
Theflyonthewall.blog
Everybody Run!
Random Roger's Big Picture
Views in these blog posts are those of the author and not of Reuters.
Also On Reuters
Blog: Your child's toys aren't safe -- who's to blame?" / style="margin-top:0px;">Blog: Your child's toys aren't safe -- who's to blame?Minorities worry more about housing slump: pollLiz Claiborne to design gadget fashion for Best Buy
Ads by GoogleWhat's This?
3 Stocks Ready to Soar
Sleep Easy with Stealth Stocks. Free Report by Stock Market Letter.
www.StealthStocksOnline.com/
Top 10 Stocks for 2007
America's 9 Leading Stock Experts Share Their Top Picks. Free Report.
www.NewsletterAdvisors.com
World's Top Penny Stock?
Learn How A Small Exploration Co. Will Be the Top Stock of 2007
www.DailyWealth.com/Penny_Report
Investools
Learn the 5-Step Method and learn to trade stocks with confidence.
www.investools.com
Editor's ChoicePicturesVideoArticles A selection of our best photos from the past 24 hours. View Slideshow
In Depth
Entertainment
Sports
Science: Great Lake seen heading for record lows
Entertainment: "The King" is back in Germany
International: British legacy alive in India
Most Popular on ReutersArticlesVideoSearchedRecommended "Blood in the water" in Florida property market
Lottery winner still in shock
Biker fails to notice missing leg
Six Italians shot in Germany in mafia feud | Video
Australia discovers ocean current "missing link"
Secret World War Two nuclear city open to tours
Internet is "the new Afghanistan": NY police commissioner
Eye-catching new Taser sparks controversy
Sex video causes outrage
Bloggers film under skirts, due in court
Most Popular Articles RSS Feed
A sticky situation
Crocs keep man up tree for 8 days
The Update: Deadly Iraq bomb blitz
Summer fun with Hamas and Fatah
The Update:Dig for survivors in Iraq
Reuters QuickCut: 130 cats for lunch
A whole lot of monkey business
Surfs up in New York City
Talk of the Town: Divorce news
Bridge collapse in southern China
Most Popular Videos RSS Feed
AAPL
GOOG
ABN
BSC
C
IBM
GE
ICI
FO
SSGFY |
