Legal Battle Escalates Between Broadcom, Intel

Two leading chip makers continue to clash over allegations of patent

Broadcom threw the most recent jab
late Monday when it filed a preliminary injunction to block Intel from marketing, sampling, distributing
or shipping, its 82543GC Media Access Controller product.

According to the motion, Intel and its subsidiary,
Level One Communications Inc., have shown a “textbook example of trade
secret misappropriation and unfair competition.”

The filing took place at the Superior Court of the State of California,
County of Santa Clara.

The motion charges Intel with:

  • Acquiring highly confidential and unreleased communications chips
    developed by Broadcom by knowingly inducing a direct breach of a
    nondisclosure agreement between Broadcom and a third party.

  • Using misappropriated Broadcom chips to accelerate its development of
    several of its own products.

  • Using the misappropriated Broadcom chips at trade demonstrations to
    mislead potential customers into believing that Intel had a working product.

  • Resorting to tortuous actions to prevent product delays of months, if
    not years.

The allegations are totally false, stated Chuck Mulloy, spokesperson for

“The accusations are without merit and we will be happy to present our
arguments in court,” he said. “We have a responsibility to our shareholders
to protect the investment represented by our intellectual property.”

Discourse between the two companies can be traced back to late May. At
that time, Intel filed a motion accusing Broadcom of
improperly gaining access to its trade secrets by recruiting key employees
from Intel’s networking division.

The court concluded that the employees did not disclose any confidential
information, but did find that Broadcom used the job interview process as a
means of attempting to extract trade secrets.

Broadcom was ordered to set up a training program, monitored by a third
party, that ensures employees recruited from competitors did not disclose
the private information of their former employer.

In August, Intel filed a federal patent infringement suit against
Broadcom, accusing Broadcom “of building its business by violating Intel’s
technology rights.”

In that suit, Intel stated that Broadcom violated five Intel patents, one
relating to networking, one to chip packaging and three to video
compression. Intel is seeking an injunction to prevent further infringements
as well unspecified damages and court costs.

In response to that charge, Broadcom Chief Executive Officer Henry
Nicholas said Intel was “resorting to specious litigation in the courts
rather than competition in the marketplace.”

Mulloy of Intel noted that, to date, no court dates have been set.

In related news, Intel announced Monday that an investigation by the Federal Trade Commission into its business
practices has been closed.

In a letter addressed to Intel president and Chief Executive Officer
Craig Barrett, Richard Parker, a director of the Bureau of Competition at
the FTC said, “Upon further review of this matter, it now appears that no
further action is warranted by the Commissioner at this time. Accordingly,
pursuant to authority delegated by the Commission, the investigation has
been closed.”

The investigation began in 1997 and covered all aspects of Intel’s

Bill Blanning, a spokesperson for Broadcom, noted there is no
relationship between the FTC announcement and the courtroom filing.

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