Feds Dismiss Broadcom Antitrust Suit

UPDATED: A New Jersey federal court dismissed a 2005 antitrust lawsuit brought by Broadcom against Qualcomm for its licensing of third-generation technology patents.

The Irvine, Calif., chipmaker’s arguments “do not support an inference
that competition in the UMTS chipset market is, or will be injured by
Qualcomm’s licensing practices,” ruled Judge Mary Cooper.

In dismissing the Broadcom case, Cooper said the lawsuit “does not
support claims for monopolization or attempted monopolization,”
according to Thursday’s ruling.

In 2005, Broadcom, which also makes 3G chipsets, filed the federal
antitrust suit against Qualcomm, charging its licensing practices
were unfair and violated antitrust laws.

Broadcom, like other
chipmakers developing products for the lucrative 3G market, must
negotiate with Qualcomm for the use of patented Wideband Code Division
Multiple Access (WCDMA) technology.

Qualcomm responded with
a lawsuit charging Broadcom with patent infringement.

Although the ruling roundly rejected Broadcom’s charges of unfair
licensing, “Qualcomm should take little comfort in the court’s
decision,” said David Dull, Broadcom’s senior vice president of
business affairs and general counsel, in a statement.

Noting Cooper gave Broadcom the option of amending the complaint,
Dull said his company is considering whether to re-file the lawsuit,
asking the court to reconsider or appeal the decision.

The company argued the court’s decision countered a recent
Federal Trade Commission ruling that found memory chipmaker Rambus had gained unfair advantage by deceiving the standards-making body.

Dull does not believe this settled all the issues.

The judge “simply held
that Qualcomm’s alleged abuse does not give rise to federal antitrust
liability,” he said.

For its part, San Diego, Calif.-based Qualcomm felt the decision was
“thoughtful and comprehensive,” Steve Altman, the company president,
said in a statement.

Altman denied the patent-holder’s licensing procedure was unfair.

“Qualcomm has scrupulously abided by its commitments to standards
development organizations to offer licenses for its essential patents
on fair and reasonable terms,” Altman said.

Qualcomm has more than 135 licensing
agreements with telecommunications companies, he added.

When Broadcom filed the lawsuit last year, the company said Qualcomm
had said it would offer the WCDMA licenses on “fair, reasonable and
non-discriminatory” terms.

However, after the UMTS standard was
approved, Qualcomm backed out of the agreement, said Broadcom.

In her ruling, Cooper said it “is not the judicial role to readjust
the risks in high-stakes commercial dealings.”

The
federal judge wrote that Qualcomm did not refuse to license its
patents to Broadcom, but that Broadcom had refused the Qualcomm licensing terms.

Violations of the antitrust law “do not inhere in failed
negotiations,” noted Cooper.

“The purpose of the Sherman Act is not
to protect businesses from the working of the market; it is to
protect the public from the failure of the market,” according to the
decision.

The New Jersey federal ruling also said while Qualcomm’s licensing
may hurt Broadcom, “it must have threatened injury to competition —
not just competitors — to give rise to antitrust liability for
attempted monopolization.”

Neither Broadcom nor Qualcomm were available for comment.

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