April 27, 2009

Qualcomm, Broadcom settle patent case

Rival U.S. cellphone chip makers Qualcomm and Broadcom say they will call off their legal sniping and settle their patent infringement litigation.

Under a settlement announced late Sunday, Qualcomm, with headquarters in San Diego, will pay Broadcom, located in Irvine, Calif., $891 million over a four-year period. However, Broadcom won't be able to give its customers free access to Qualcomm's cell phone technology, which was at the heart of the disagreement, the San Diego Union-Tribune reported.

That proviso in the settlement means phone manufacturers who buy Broadcom chips will have to pay Qualcomm a licensing fee for each phone it makes, industry experts told the newspaper.

At first glance, from Qualcomm's perspective, this is better than many people feared, said Mark McKechnie, analyst for Broadpoint AmTech. There's been no change to Qualcomm's business model.

Qualcomm receives most of its income from licensing fees paid by cell phone manufacturers and chip-making competitors, and cellphone makers such as Nokia have attacked the San Diego company's business model, the newspaper said.