While Broadcom has had a recent run of favorable results in its ongoing intellectual property war with Qualcomm, it’s luck ran out today. A federal judge in San Diego dismissed one of Broadcom’s many suits against the mobile chip maker–this one claiming that Qualcomm’s patents were exhausted and therefore unenforceable.
Broadcom filed the suit in October, claiming that Qualcomm misused its vast patent portfolio in CDMA and other wireless technologies to “double recover” royalties from licensees. Qualcomm not only sells Mobile Station Modem (MSM) chips that go into CDMA and W-CDMA handsets, it licenses to those manufacturers the core intellectual property used to power them. But Broadcom alleged that by selling the chip Qualcomm is exhausting its patent rights, and that Qualcomm’s licensing practices amount to double-charging the industry for the same technology.
US District Court Judge William Hayes, however, rejected Broadcom’s reasoning, ruling that Broadcom provided no specific of exhausted patents and that the purported damages Qualcomm has wrecked upon the industry were too speculative.
Broadcom isn’t the first to make this case against Qualcomm. Nokia filed a similar lawsuit in 2007 in European courts, but that case, too, was thrown out. But last year, the US Supreme Court ruled on important case on the issue of patent exhaustion, which seemed to favor Broadcom’s argument. (For a detailed explanation of how the Court’s ruling applies to Qualcomm see this San Diego Union-Tribune article). In that case, Quanta Computer claimed it didn’t have to pay royalties to LG Electronics for chips it bought from Intel, even though those chips contained technology Intel licensed from LG. The Supreme Court sided with Quanta.
The legal battles between Qualcomm and the industry are only likely to escalate as the industry moves toward 4G. In an effort to avoid the intellectual property wars that scarred 3G, vendors in both the WiMAX and long-term evolution (LTE) spaces have tried to work out cross-licensing agreements before the large-scale advent of either technology, believing they can prevent a single patent holder or group of patent holders from exercising undue influence on the market. Qualcomm, which owns intellectual property that applies to both technologies, has not joined either effort.