The savagery of a statement issued this week by a US court, and loudly repeated by Broadcom puts Qualcomm in a very poor light with accusations of litigation misconduct and criticisms of Qualcomm executives and counsel.
The statement was issued as Qualcomm was ordered to pay all Broadcom’s attorney fees, court costs, witness fees, travel expenses in the case, brought by Qualcomm, over a claim that Broadcom owed royalties on inventions that were included in the H.264 patent and which Qualcomm had never told the standards body about.
Broadcom was exonerated and the court said that by not declaring its interests in an international patent Qualcomm waived its rights to enforce all claims
The judge talked about Qualcomm’s bad faith participation in the H.264 standard-setting body, the Joint Video Team (JVT); and the litigation misconduct of Qualcomm through its employees, hired outside witnesses, and trial counsel during discovery, motions practice, trial and post-trial proceedings.
According to the court, “Qualcomm closely monitored and participated in the development of the H.264 standard, all the while concealing the existence of at least two patents it believed were likely to be essential to the practice of the standard, until after the development was completed and the standard was published internationally. Then, without any prior letter, email, telephone call, or even a smoke signal, let alone attempt to license Broadcom, Qualcomm filed the instant lawsuit against Broadcom for infringement of the ‘104 and ‘767 patents.”
“The court’s findings indicate that this is one of the most serious and egregious cases of standards abuse and litigation misconduct that our industry has ever witnessed,” said David J. Rosmann, Broadcom’s Vice President of Intellectual Property Litigation. “While we are gratified with the court’s ruling, we are also disappointed that Qualcomm chose to stoop to such tactics.”
The Court went on to say, ” This abuse commenced with Qualcomm’s abrupt commencement of suit, then continued in discovery through Qualcomm’s constant stonewalling, concealment, and repeated misrepresentations concerning corporate documentary evidence that would have revealed the fullness of the corporate plan; and in trial through Qualcomm’s presentation of numerous witnesses who steadfastly testified falsely denying even the awareness, let alone the participation in the JVT project and through the actions of Qualcomm’s lead and co-counsel up to the time Qualcomm substituted new lead counsel, who adamantly denied the obvious”
The court concluded, “In light of all the above evidence finally revealed, the eventual collapse of Qualcomm’s concealment efforts exposes the carefully orchestrated plan and the deadly determination of Qualcomm to achieve its goal of holding hostage the entire industry.”
There is more to the statement, some 40 plus pages, but the sentiment will echo around the industry. Qualcomm’s fearsome reputation as a litigious defender of its own technology is gradually being replaced by a reputation as a scheming opportunist.
Which is why it is no surprise then that the Bush Administration this week allowed to stand the US International Trade Commission (ITC) order barring the importation of Qualcomm chips, a move which came from yet another piece of litigation with Broadcom over power saving patents, encouraging Qualcomm to settle with Broadcom as quickly as possible.
Qualcomm’s strategy of calling for a presidential veto was in tatters after Verizon Wireless cut its own licensing deal with Broadcom, bypassing Qualcomm and the lack of a veto was widely predicted.
The ITC’s June 7 order was subject to a 60-day Presidential review period, which involved extensive review by US Trade Representative Susan Schwab, who the President had previously designated to decide whether to let the ITC order stand or to overturn it through a statutory disapproval.
There remains a US anti-trust appeal by Broadcom and it is also involved in a European anti-trust case against Qualcomm and if these go badly for Qualcomm it may well decide to offload its intellectual property business into a separate arm, while it pursues it leading market position as a chip designer.