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Broadcom, Intel Settle Patent Disputes

The Irvine company will pay $60 million, and the rivals agree to a cross-licensing deal.

August 09, 2003|From Bloomberg News

Broadcom Corp., the largest maker of chips for cable modems, agreed Friday to pay Intel Corp. $60 million to end three years of patent litigation.

Intel, the world's biggest producer of computer chips, and Broadcom also agreed to license each other's technology for the next five years. Irvine-based Broadcom said it would take a charge for the payment in the quarter ended June 30.

The settlement resolves lawsuits pending in federal courts and with the International Trade Commission. The two companies were scheduled to begin a retrial next month of a suit in which Intel claimed that almost every product made by Broadcom infringed one or more Intel patents. Intel was seeking $82 million and could have asked the judge to halt sales of Broadcom products. Broadcom denied the allegations.

Broadcom shares fell 31 cents to $20.24 on Nasdaq. Shares of Santa Clara, Calif.-based Intel fell 41 cents to $23.58, also on Nasdaq.

Broadcom shares, up 34% since the beginning of the year, have declined recently on concern about competition from Intel in the market for input-output chips for servers.

The cross-licensing agreement covers patents that are owned or controlled by either company and is effective through Aug. 7, 2008, the companies said. The agreement covers existing products and doesn't require either side to make royalty payments.

Broadcom will pay the $60 million in cash in two installments, a spokesman said. Broadcom had cash and cash equivalents of $453.4 million at the end of June. The settlement amounts to about 6% of Broadcom's 2002 sales.

Broadcom, which has posted three straight years of losses, will make the payment in its third and fourth fiscal quarters.

Intel had lost the case slated for September retrial almost two years ago after a federal jury in Wilmington, Del., said the Intel patents were either invalid or not infringed. U.S. District Judge Sue Robinson revived the suit in February, saying part of the jury verdict was "inherently inconsistent."

Broadcom blamed it on the jury's failure to "check the appropriate box in a very complicated verdict form."

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