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Qualcomm to pay US$891 million over four years to settle suit with Broadcom

AP , SAN DIEGO, CALIFORNIA

Chipmaker Qualcomm Inc said late on Sunday it would pay Broadcom Corp US$891 million over four years to settle a longstanding dispute over patents and royalties.

The company said it would pay US$200 million of the settlement in the quarter ending June 30. The agreement dismisses with prejudice all litigation between the companies, including overseas, with Broadcom agreeing to withdraw its complaints to the European Commission and the Korea Fair Trade Commission.

Qualcomm said the terms of the agreement won’t change its 3G and 4G licensing revenue model. The company’s chips are used in many of the world’s cellphones, and it also licenses technology to wireless communications companies.

Under the agreement, the companies have granted certain patent rights to each other. However, neither company’s customers receive rights to patents related to chip products incorporated into non-cellphone products and equipment.

“The settlement will allow us to direct our full attention and resources to continuing to innovate, improving our competitive position in this economic downturn and growing demand for wireless products and services,” Qualcomm chairman and CEO Paul Jacobs said in a statement.

“We have set aside our differences while addressing the needs of our customers, our shareholders and the industry,” Broadcom president and CEO Scott McGregor said.

San Diego-based Qualcomm had delayed its quarterly earnings report last week to complete settlement talks with Broadcom. The company was to post the quarter’s results yesterday.

The settlement ends years of litigation between the companies in which Broadcom had sued Qualcomm, alleging its rival was misusing its patents to suppress industry competition.

The company had argued that it only needed to identify the types of products at issue — chips used in wireless communications and handsets — to get a court order declaring the patents unenforceable.

Irvine, California-based Broadcom had also claimed the threat of patent litigation made customers reluctant to buy its chips. In May 2007 the company won US$19.6 million in damages, after a jury found Qualcomm had violated three of its chip patents.

But Qualcomm had also scored some legal victories with three consumer class-action suits against the company alleging antitrust violations thrown. The chipmaker had been accused of failing to license its technology on fair terms.

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