Original URL: http://www.theregister.co.uk/2007/02/01/broadcom_qualcomm_ipr/

Broadcom batters Qualcomm in IPR court

Qualcomm forced to lower high patent royalties

By Faultline

Posted in Broadband, 1st February 2007 10:48 GMT

Broadcom has now won its second patent spat with Qualcomm in court, this time through a jury trial that lasted nine days, and had at its heart, patents associated with H.264, the new standard codec which comes out of the telecommunications community and the MPEG standards body.

What we find alarming is the fact that finally, at the end of the trial, Broadcom is able to tell us more clearly what the legal battle was all about, which is that the patent royalties that Qualcomm wanted to bill Broadcom turned out to be more than twice what the all other technology contributors to the standard require when put together.

It's all very alarming in that there was a patent pool put together for H.264, but it appears to include everyone that helped build the H.264 technology except Qualcomm. For instance, it includes Daewoo, France Télécom, the Fraunhofer institute, Fujitsu, Hitachi, Philips, LG Electronics, LSI Logic, Matsushita, Microsoft, Mitsubishi, Samsung, Sharp, Siemens, Sony, Toshiba and JVC to name but a few. H.264 technology is at the heart of devices like iPods, DVRs, set tops, DVD players and where video enabled, cellular handsets.

And the patent pool requests that for up to five million encoder decoder units sold OEM, the manufacturer pays 20 cents each, above five million units this falls to 10 cents each, up to a maximum of $3.5m, with that maximum rising gradually in later years to $5m.

Qualcomm felt that its two patents were worth over $8m from Broadcom alone. Which is interesting, because Microsoft has around 200 such patents and many of the CE manufacturers have even more. And yet of 160 total patents that were deemed essential, each of these companies warrant just a small share of the patent pool revenues (the split varies based on who has contributed the most technology).

There are two issues here, firstly that Qualcomm told the standards body that it would offer its technology on a reasonable and nondiscriminatory basis, and secondly that Qualcomm never joins patent pools and always pursues its IPR alone. And yet Qualcomm executives, as we meet them at events around the world, get annoyed that analysts go on about the "intellectual property" question complaining that we don't ask anyone else about it.

This type of practice is going to go away, in that most standards bodies have been bitten more than once and practice is gradually changing so the standards body will agree a price for the technology before taking an irrevocable decision to include it in any standard. But it hasn't gone away yet.

So does this mean that Qualcomm invented part of the standard that no one has decided to use except Broadcom, which is why it has suddenly gone after it with this suit, or is it that Qualcomm is discriminately chasing a direct rival on the patent, but no one else.

Either way it is a huge embarrassment for Qualcomm, and the company needs to drop its stance on this particular part of IPR and join the MPEG LA patent pool. Getting a standard of this type together takes an awful lot of effort and takes around a decade, and this type of thing just blocks its adoption.

We can understand that Qualcomm wouldn't want to do this on technologies it dominates such as CDMA and some core error correction systems, but where it has contributed a tiny amount to a patent process it should just go with the flow.

If this turns out to be the type of issue that the rest of the Qualcomm Broadcom dispute is based on, then it will all go in Broadcom's favour. The federal jury sat at a trial in San Diego and found that Broadcom had not infringed the two patents. The verdict was unanimous and was reached after six hours of deliberation. Senior officials at both companies were involved with Broadcom's co-founder Dr Henry Samueli and Qualcomm co-founder Dr Irwin Jacobs both taking the witness stand, along with many other expert witnesses.

The jury found that Qualcomm had knowingly violated a duty to disclose its patents to the standards organisation involved in the run up to its adoption as a standard and that Qualcomm did not operate in good faith in its dealings with the US Patent and Trademark Office.

David Dull, Broadcom's Senior Vice President and General Counsel said: "The trial cast a bright light on Qualcomm's penchant for abusing the rules and procedures of industry standards-making bodies."

This was the second Broadcom victory in court over Qualcomm. It won a case involving the US International Trade Commission last year that showed that Qualcomm's cellular baseband chips infringe on Broadcom patents.

But there remains a long way to go on the Broadcom Qualcomm battles, with Qualcomm cellular baseband patents at the heart of another suit and Broadcom patents relating to Bluetooth, and cellular technologies at the heart of another, both to be heard later this year.

Altogether, Broadcom says it has infringement claims from 14 different Broadcom patents awaiting trial against Qualcomm along with two anti-trust actions, one in the US and another in Europe.

A statement from Qualcomm recited in the US press, claimed a small victory in that its video compression patent remains valid, according to the judge, despite all the other controversy.

Copyright © 2007, Faultline

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