Qualcomm Incorporated (Nasdaq: QCOM), a leading developer and innovator of Code Division Multiple Access (CDMA) and other advanced wireless technologies, stated that a federal jury in San Diego has found that Broadcom did not infringe two of Qualcomm's patents related to video encoding, although the jury ruled that the patents are valid. The two patents are U.S. Patents Nos. 5,452,104 and 5,576,767 relating to techniques for compressing digital video signals for more efficient storage or transmission which Qualcomm had alleged were infringed by Broadcom's integrated circuits for use in high definition set top cable and satellite television boxes and certain other high definition video equipment. Qualcomm does not currently have a licensing program for this product area. Consequently, the jury's verdict will have no impact on Qualcomm's existing licensing business.
In addition, the jury provided an adverse advisory verdict on two issues that, by law, must ultimately be decided by the trial judge: whether Qualcomm had waived its rights to enforce either of these patents against Broadcom by virtue of Qualcomm's participation in a video standards-setting body, and whether Qualcomm had engaged in conduct before the Patent Office during the application process that would render either of the patents unenforceable. The judge has not yet set a schedule for his decision regarding these issues.
“We appreciate the difficult task that the jury faced in trying to understand the complex technical issues in the case, and are pleased that they found that our patents are valid,” said Lou Lupin, executive vice president and general counsel for Qualcomm. “We disagree with the remainder of the jury's findings and are quite disappointed with the advisory votes. We have prosecuted thousands of patent applications in the U.S. Patent Office over the past two decades and have worked very hard to be candid and forthright in all of our dealings there. Similarly, we have carefully followed the rules and IPR policies of the many standard setting organizations in which we participate. Standards are very important to our business, and the integrity of standard setting organizations matters to us very much. We believe a careful examination of the facts does not support either of the jury's advisory verdicts.”
This case is only the first of Qualcomm's four patent infringement lawsuits against Broadcom that are to be tried before the end of this summer. Qualcomm also has a case pending against Broadcom for misappropriating Qualcomm's trade secrets. It was Broadcom, however, that initiated the litigation between the companies when it became dissatisfied with the course of license negotiations between the parties in 2005 and abruptly and without warning filed three separate patent actions against Qualcomm and shortly thereafter an antirust complaint. Qualcomm was compelled to file litigation to enforce its patents against Broadcom in response to Broadcom's attacks and not because Qualcomm was targeting the video compression industry as Broadcom has claimed. The litigation commenced by Broadcom has not gone well for Broadcom to date. A federal court in New Jersey summarily dismissed Broadcom's antitrust complaint against Qualcomm without the need for a trial, ruling that Broadcom had failed to allege any facts that amounted to a violation of the antitrust laws by Qualcomm. And in a patent infringement proceeding brought by Broadcom before the U.S. International Trade Commission, the administrative law judge presiding over the matter has ruled that Broadcom was not entitled to the remedies it was seeking against Qualcomm and cellular handset suppliers that use Qualcomm's chipsets, although the full commission has not yet completed its review of the judge's recommendation as to remedy. Broadcom's other cases have not yet come to trial.
Qualcomm Incorporated (www.qualcomm.com) is a leader in developing and delivering innovative digital wireless communications products and services based on CDMA and other advanced technologies. Headquartered in San Diego, Calif., Qualcomm is included in the S&P 500 Index and is a 2006 FORTUNE 500® company traded on The Nasdaq Stock Market® under the ticker symbol QCOM.
Except for the historical information contained herein, this news release contains forward-looking statements that are subject to risks and uncertainties, including the Company's ability to successfully design and have manufactured significant quantities of CDMA components on a timely and profitable basis, the extent and speed to which CDMA is deployed, change in economic conditions of the various markets the Company serves, as well as the other risks detailed from time to time in the Company's SEC reports, including the report on Form 10-K for the year ended September 24, 2006, and most recent Form 10-Q.