[A2k] (San Diego Union-Tribune) Jacobs testifies against chip ban:Qualcomm's chairman wants license agreement

[Thiru Balasubramaniam]

http://www.signonsandiego.com/news/tech/20070816-9999-1b16qcom.html

Jacobs testifies against chip ban

Qualcomm's chairman wants license agreement
By Jennifer Davies
UNION-TRIBUNE STAFF WRITER

August 16, 2007

SANTA ANA =96 Qualcomm Chairman Irwin Jacobs took the stand yesterday to
try to persuade a federal judge not to ban the sale of the company's
cell phone chips, saying such a move could inflict substantial harm to
its business.

Jacobs, the Qualcomm co-founder who stepped down as CEO two years ago,
testified in front of U.S. District Judge James Selna, who is trying to
determine if Qualcomm should face further punishment for infringing on
three patents held by its rival Broadcom.

In May, a Santa Ana jury found that Qualcomm was infringing on a video
compression patent, a push-to-talk patent as well as a patent on
technology that helps transfer calls between networks.

Last week, Selna doubled the jury's damages to $39.3 million and
ordered Qualcomm to pay Broadcom's legal expenses.

Broadcom attorney William Lee took Jacobs to task for Qualcomm's
historically tough stance against infringement when it came to
Qualcomm's patents. Repeatedly, Lee pointed out that Qualcomm has
sought injunctions when its patents have been infringed.

Jacobs answered that Qualcomm's goal is to sign license agreements so
companies can use its patented technology for a fee.

=93We've never had injunctive relief,=94 Jacobs said. =93Our objective is
always to have a license.=94

Qualcomm says it would like the judge to order a compulsory licensing
agreement with Broadcom, under which it would pay a set rate to use the
three patents, an estimated 2 percent on Qualcomm's worldwide chip
sales.

David Rosmann, Broadcom's vice president of intellectual property
litigation, said the proposal was ridiculous. Rosmann compared it to
someone building a driveway on your property and instead of removing
the driveway, offering to pay $10 a year to keep it there.

=93Instead of 'stop trespassing,' it's 'we'll pay you to trespass,' =94 he
said of Qualcomm's reasoning.

For its part, Broadcom wants Selna to prohibit Qualcomm from selling
W-CDMA chips, a next-generation wireless technology that is rapidly
being adopted around the world.

For Qualcomm's homegrown wireless technology, which is used by such
wireless phone companies as Sprint, Broadcom wants an 18-month
phaseout. During that time, Qualcomm would have to pay a royalty rate
of 6 percent per phone sold in the United States, which Rosmann
estimated would be from $6 to $8 a phone.

On the stand, Jacobs said 18 months might not be enough time to come up
with a work-around for Broadcom's patents.

While Qualcomm now is saying a possible ban could be a huge hit to its
business, Broadcom's attorneys argued that Qualcomm has changed its
story on that issue in this case and others.

Lee pointed out that former general counsel Lou Lupin, who resigned
earlier this week for personal reasons, told the media after the
verdict in May that it would have little effect. Jacobs said the impact
could be substantial.

=93Qualcomm has established a track record of saying, 'This isn't going
to affect us' to the markets and saying another thing to the courts,=94
Rosmann said.

Lee also tried to get Jacobs to concede that Broadcom was a direct
competitor to Qualcomm, which could be a key point in persuading Selna
to order an injunction against Qualcomm's chips.

In his testimony, Jacobs repeatedly pointed out that Broadcom does not
yet sell a certain type of next-generation wireless chips, known as
W-CDMA. Testimony is expected to conclude by Friday morning at the
latest, and Selna should issue his decision in September.

If an injunction is ordered, it could be another huge setback for
Qualcomm, which has been battered on several fronts in recent weeks.

Last week, the Bush administration let stand a U.S. International Trade
Commission ban on new phone models that use the company's wireless
chips. The ban had been imposed as a way to punish Qualcomm for
infringing on another patent held by Broadcom.

Additionally, a federal judge ruled that Qualcomm knowingly failed to
turn over thousands of relevant documents in a separate patent trial
against Broadcom.

Judge Rudi Brewster said Qualcomm not only concealed documents, but
also intentionally deceived a standards body. Because of Qualcomm's
=93exceptional=94 misconduct, Brewster ordered the company to pay
Broadcom's legal expenses, which could run as high as $10 million.

---------------------------------
Thiru Balasubramaniam
Geneva Representative
Knowledge Ecology International (KEI)
voice +41.22.791.6727
fax +41.22.723.2988
mobile +41 76 508 0997
thiru@keionline.org