Jury Finds Broadcom Does Not Infringe 2 Qualcomm Patents,Recommends Findings That Qualcomm Engaged in Inequitable Conduct and Abused Industry Standard

Broadcom Corporation (Nasdaq: BRCM), a global leader in semiconductors for wired and wireless communications, announced that afternoon a federal jury in San Diego found that the company had not infringed two patents for digital video compression owned by Qualcomm Incorporated (Nasdaq: QCOM).
The nine member U.S. District Court jury reached its unanimous verdict after six hours of deliberation, rejecting Qualcomm's claims of infringement following a nine day trial that included testimony from multiple experts as well as the companies' chairmen, Broadcom co-founder Dr. Henry Samueli and Qualcomm co-founder Dr. Irwin Jacobs.

In addition to finding the two patents not infringed, in an advisory opinion to the presiding judge the jury found that Broadcom proved by clear and convincing evidence that Qualcomm knowingly violated a duty to disclose its patents to the Joint Video Team, or its parent organization, during the JVT's preparation and eventual adoption of the video compression industry standard known as the H.264 standard.

Additional evidence of Qualcomm's effort to unfairly leverage the H.264 standard emerged during trial, with testimony that the company requested a royalty for a single patent allegedly reading on H.264 that is twice the amount charged by the entire MPEG LA licensing organization for its pool of 160 essential patents -- and with Qualcomm's attempt to enjoin Broadcom's future sales of H.264-compliant products.

In a second advisory opinion to the judge, the jury found that Broadcom proved by clear and convincing evidence that Qualcomm committed inequitable conduct before the U.S. Patent and Trademark Office (USPTO) by breaching its duty of honesty and good faith in dealings with the USPTO.

"We are obviously very pleased and very grateful for this jury's diligence in working to arrive at the truth, even when presented with some very complex and intricate engineering testimony," said David A. Dull, Broadcom's Senior Vice President and General Counsel. "This is a victory not just for Broadcom but for the entire digital video community, against an attempt by Qualcomm once again to tax an important new technology -- in this instance based upon the claims of a single patent. The trial not only showed that Qualcomm was wrong about Broadcom's alleged infringement, but also cast a bright light on Qualcomm's penchant for abusing the rules and procedures of industry standards-making bodies."

Today's victory marks Broadcom's second consecutive win against Qualcomm involving intellectual property issues. Last fall, a United States International Trade Commission (ITC) judge ruled that Qualcomm's cellular baseband chips infringe five claims of a Broadcom patent. The full Commission affirmed that ruling in December and is now considering remedies against many Qualcomm products. The ITC action was the first of several patent disputes between the companies to go to trial.

Additional Patent Actions

Broadcom is now in the final stages of preparing additional cases that go to the heart of its patent infringement disputes with Qualcomm concerning cellular baseband chips. In March 2007, the U.S. District Court in San Diego is scheduled to try Broadcom's claims that Qualcomm infringes two Broadcom patents relating to Bluetooth® technology in cellular phones. Then in May 2007, the U.S. District Court in Santa Ana, Calif. is scheduled to try Broadcom's claims that Qualcomm infringes three additional Broadcom patents relating to cellular technology. Qualcomm and Broadcom have other, later-filed patent disputes pending in U.S. District Court in San Diego that are also expected to be tried this year. Following conclusion of the ITC proceeding, expected this March when the Commission is scheduled to rule on remedies for Qualcomm's infringement, Broadcom will also litigate in the Santa Ana court the same three patents that were tried last year in the ITC.

Altogether, Broadcom currently has infringement claims from 14 different Broadcom patents awaiting trial against Qualcomm.

Broadcom is a major technology innovator in the global communications industry, with over 1,900 issued U.S. and 750 issued foreign patents, about 5,900 additional pending patent applications, and one of the broadest intellectual property portfolios addressing both wired and wireless transmission of voice, video and data.

Antitrust Actions

Separately, in other actions, Broadcom has joined five other leading mobile wireless technology companies in filing complaints with the European Commission alleging that Qualcomm has engaged in anticompetitive conduct in the licensing of its patents and the sale of its chipsets for mobile wireless devices and systems. The six companies assert that Qualcomm is violating EU competition law and failing to meet the commitments it made to international standards bodies to license its technology on fair, reasonable and non-discriminatory terms. Broadcom and other wireless technology companies have filed similar complaints before the Korean Fair Trade Commission. Broadcom is also appealing last year's dismissal without prejudice of its federal antitrust lawsuit against Qualcomm. The dismissal, by a U.S. District Judge in New Jersey, was appealed to the U.S. Court of Appeals for the Third Circuit in September 2006. A number of standards development organizations, consumer advocacy groups, and other mobile wireless firms have filed amicus briefs with that court in support of the position that violations of industry standards-making processes can give rise to antitrust liability.