U.S. News

Broadcom Seeks Ban on Qualcomm Chips


Qualcomm, hoping to rebound from a string of legal setbacks, urged a federal judge Tuesday to reject a competitor's request to stop it from selling cell phone chips that infringe on patents.

Broadcom asked U.S. District Judge James Selna to impose a ban on Qualcomm chips after a jury found in May that Qualcomm violated three patents on Broadcom technologies to help cell phones process video and walkie-talkie conversations and hand off calls between different networks.

Qualcomm attorney Evan Chesler argued that a ban would give Verizon Wireless an unfair advantage after it agreed last month to pay Broadcom $6 for each phone with a patent-infringing Qualcomm chip - up to $40 million a quarter or $200 million over the life of the agreement.

Chesler said a ban "would completely change the playing field" in favor of Verizon Wireless, which in a joint venture between Verizon Communications and Vodafone Group.

Sprint Nextel also depends heavily on Qualcomm's wares but has not struck a deal with Broadcom.

Broadcom attorney Bill Lee argued for a ban.

"It is an equitable result. It is a fair result," he told the judge.

The judge, who doubled jury damages to $39.3 million on Monday, is considering additional penalties on Qualcomm. The hearing, which began Tuesday, is expected to last several days.

Under questioning, Broadcom Chairman Henry Samueli said his company does not sell chips in the United States incorporating a technology known as WCDMA. That statement would appear to undermine Broadcom's argument that it would suffer irreparable harm if Qualcomm, a major WCDMA chip supplier, continued selling its chips.

Qualcomm Chairman Irwin Jacobs was also expected to testify later in the week.

The showdown comes in one of several legal disputes between the rival chipmakers.

Last week, the Bush administration upheld a ban on imports of high-end cell phones that contain Qualcomm chips, creating potential headaches for some carriers and manufacturers.

The U.S. International Trade Commission imposed the ban in June after finding San Diego-based Qualcomm infringed on a patent that protected Broadcom's technology to conserve phone battery power.

David Rosmann, Broadcom's vice president for intellectual property litigation, said the federal judge in Santa Ana lacks authority to ban phones but has other tools.

Chip Limitations

Broadcom's proposed order would prevent Qualcomm from making, using, importing or selling some of its most popular chips in the United States and impose limits on marketing, testing and designing products. It would exclude chips that run on CDMA2000 or EV-DO network technologies for 18 months if Qualcomm pays Broadcom 6% of sales on those products.

Smith Brittingham, a patent attorney in Washington, D.C., agreed the impact would be more limited than the ITC ban, but he said a court injunction could still disrupt Qualcomm's business.

"It essentially makes it extremely difficult for Qualcomm to work with customers to make new (chip) designs," he said.

The U.S. Supreme Court raised the bar for companies in Broadcom's position to win injunctions with a May 2006 ruling that favored eBay in a patent dispute, Brittingham said. The court threw out a ruling by a federal appeals court that said injunctions should be automatic unless there are exceptional circumstances.

Even if Broadcom convinces the judge that it would suffer irreparable harm if Qualcomm continues selling the patent-infringing chips, judges commonly put orders on hold during appeal, Brittingham said.

On Monday, Qualcomm said Lou Lupin had resigned as general counsel. Carol Lam, one of eight federal prosecutors fired by the Bush administration this year, was named his interim replacement.

Last week, a federal judge in San Diego excoriated Qualcomm for "gross litigation misconduct" in another dispute with Irvine-based Broadcom, saying Qualcomm waived rights to enforce two patents on compressing video signals because it deliberately concealed them from an industry standard-setting group.