A federal judge ruled today that “despite the jury's advisory verdict to the contrary, the Court finds no clear and convincing evidence of inequitable conduct” by Qualcomm Incorporated (Nasdaq: QCOM) in obtaining two patents. The 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. A 2005 suit filed by Qualcomm in San Diego federal court accused Broadcom's video encoding chips of infringing the patents. At a trial in January 2007, Broadcom argued that Qualcomm had deceived the Patent Office by withholding certain alleged prior art in order to obtain the patents. In today's ruling, Judge Rudi M. Brewster flatly disagreed, finding that Qualcomm had disclosed the most relevant prior art to the patent office and that Qualcomm was not guilty of any conduct before the Patent Office that would render the patents unenforceable.
The judge also ruled today that Qualcomm's disclosure of its ownership of patents essential to the H.264 video encoding standard created by the Joint Video Team (JVT) standardization group was not timely in light of what he found to be the unwritten expectations of the group's members. The Broadcom chips accused of infringement by Qualcomm implement the H.264 video standard. Notably, the court did not find that Qualcomm had violated any provision of the JVT's written intellectual property policy, but rather that a duty to make an earlier disclosure arose from his conclusion that the JVT members considered themselves obligated to make IPR declarations in circumstances not mandated by the written IPR policy. The judge declared that a remedy in such circumstances should not be automatic and scheduled a further hearing on May 2, 2007 in order to determine the appropriate remedy.
“Qualcomm is gratified by the court's confirmation that our conduct before the Patent Office was lawful and consistent with our duty of candor,” said Lou Lupin, Qualcomm's general counsel. “We are very troubled, however, by the judge's finding that an obligation to make IPR declarations may arise in the standard setting environment from members' 'understandings' not expressed in the standard setting organization's written IPR policy. Such a rule would leave companies whose businesses require them to participate in standardization efforts in the untenable position of having to guess what their disclosure obligations might be. We respectfully disagree with the court's reasoning that strict compliance with a standards body's written IPR policy is not enough. We also believe that, even if such an unwritten
obligation could arise when the standards body members all considered themselves to be so obligated, all evidence here was that the JVT participants did not.”
A federal jury found in January that Broadcom's video encoding chips did not infringe Qualcomm's two patents, although the jury ruled that the patents are valid. While Qualcomm will likely appeal the jury's verdict of noninfringement, the Company will await the outcome of the May 2, 2007 hearing on remedies before making any final decision regarding an appeal.
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.