A federal judge has found Qualcomm Inc to be in contempt of an injunction concerning three Broadcom Corp patents.

The injunction, ordered on December 31, 2007 by US District Judge James V Selna, barred Qualcomm from making, using, and selling certain chipsets and software that infringe the three Broadcom patents. Specifically, the ruling impacted Qualcomm 3G WCDMA and EV-DO chips in its "Enhanced Multimedia" and "Convergence" platforms, as well as its QChat "push-to-talk" software.

Broadcom originally filed the case in US District Court in Santa Ana, Calif, in May 2005. On May 29, 2007, a jury verdict found that Qualcomm infringed three Broadcom patents and awarded $19.64 million in damages for past infringement.

Selna this week found that Qualcomm violated the injunction by continuing to use and support infringing WCDMA chips from the May 2007 trial date through the December 2007 injunction issue. In its defense, Qualcomm said it interpreted the order as requiring it to pay royalties on such products and provided service and support in reliance on that interpretation. As the court disagreed, a new accounting will require Broadcom to return the royalty payments, according to Qualcomm. The court also ruled that Qualcomm employees must stop using phones containing the WCDMA chips sold between May and December. Qualcomm said it is permitted to continue to service and support all WCDMA products containing its design around and all products containing chips sold before the verdict.

The court further found that Qualcomm violated the injunction by failing to pay royalties to Broadcom on products using version 3.0 of its QChat software. Selna and the court have ordered Qualcomm to pay Broadcom the gross profits it has earned on its infringing QChat products for the seven month period, as well as to pay Broadcom's attorneys fees in connection with the contempt proceedings. Neither Broadcom nor Qualcomm estimated the resulting charges. Qualcomm noted that it has not sold version 3.0 since the December date of the injunction and has released a design-around version of QChat.

Additionally, the court reserved determination of whether Qualcomm should also be held in contempt for post-injunction offers to sell infringing WCDMA chips pending additional discovery and proceedings.

While Qualcomm said it plans to appeal, semiconductor market analysts do not believe the court’s rulings will have a major impact on the San Diego-based company’s future products or financials.

“We believe these rulings have a limited impact on QCOM's [Qualcomm’s] forward looking product shipments and appear to refer to products shipped in prior periods,” Tim Luke, an analyst with Lehman Brothers, said in a research note this morning. “In general, we consider this ruling may not have a material impact on QCOM's financials, and while we recognize it may weigh on sentiment towards shares, we are generally encouraged that work-around solutions appear to remain viable.”

By: DocMemory
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