‘Soft Modem’ Patent Dispute Settled

Wireless component manufacturer PCTEL has settled one of a handful of patent infringement lawsuits pertaining to
its “soft modems” and other voice band modem technology.

The Chicago-based company said chipmaker Broadcom has
agreed to payout a lump sum of $3.5 million for past damages and for the two
patents relating to Ethernet technology.

The case stems from claims PCTEL filed this March against 3Com , which previously owned part of U.S. Robotics. PCTEL then
turned around in May and sued Agere Systems , Lucent
Technologies , U.S. Robotics, and Broadcom. At the time,
PCTEL claimed the competition was using its copyrighted technology
pertaining to V.90 (56 KBPS) modems. The other three cases are still
pending. According to published reports, PCTEL could recoup about $400
million from the combined suits.

The settlement is significant to the Wi-Fi community in
that it may help hardware vendors solidify their embedded systems choices.
Unlike external modems, soft modem requires software to operate. Usually
these modems do not have their own processor, requiring the processing power
of the CPU. As a result, soft modems use more computer resources than hard
modems, but they are less expensive. The deal is also significant for
Irvine, Calif.-based Broadcom, which continues to stave off competition from
the likes of Agere, Texas Instruments and Intel .

“We are pleased to have this matter behind us,” Broadcom vice president
Jeff Thermond said in a statement. “This should resolve all current and
potential disputes regarding PCTEL’s patent portfolio and allow us to focus
on the operations of our business and its future. In the process, we are
adding significantly to our growing portfolio of communications patents.”

Broadcom said it will also receive a license to all
of PCTEL’s modem patents, including those related to V.92 technology, and
other patent applications PCTEL recently acquired from Conexant Systems
, as well as a promise not to sue under PCTEL’s remaining
patents.

Broadcom said it will pay PCTEL patent royalties for sales after
2004. In return, PCTEL said it will dismiss its patent infringement lawsuit
and will receive a license to Broadcom’s voice band modem patents.

This is not the first time that PCTEL has enforced its fundamental modem
patents through litigation. In late 2001, the United States International
Trade Commission (ITC) validated several of those patents in an infringement
dispute with two other parties. As a result of that litigation, a handful of
companies took a license under PCTEL’s modem patents.

But PCTEL has methodically shifted away from modem production focusing
instead on wireless products. In particular, the company is now specializing
in Wi-Fi and cellular mobility software, software-defined
radio products and access technology. PCTEL said its WLAN software products
(Segue product line) help simplify installation, roaming, Internet access
and billing.

PCTEL said Broadcom has also agreed to become one of its Segue Roaming
Client customers and will ultimately purchase Segue software sometime in
2004.

“We are delighted to have Broadcom as both a licensee and a customer; we
look forward to the opportunity to provide value-added Wi-Fi software to
them,” PCTEL Vice President of Business Development and Licensing Jeff
Miller said in a statement. This settlement also simplifies our litigation
strategy and permits us to focus on parties with significant past and future
liability.”

Despite the loss of two of its patents to Broadcom, PCTEL still maintains
more than 115 official papers and patent applications. In addition to its
modem patents, the company has patents or applications related to DSL modems
and wireless networking.

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