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Judge Denies Injunction on Broadcom Processors

October 03, 2006|From Bloomberg News

Qualcomm Inc., the world's second-largest maker of cellphone chips, lost a bid Monday to prevent smaller rival Broadcom Corp. from shipping processors that Qualcomm claims use stolen trade secrets.

San Diego-based Qualcomm has accused Irvine-based Broadcom of stealing more than 60 trade secrets related to chips used in handsets that can surf the Internet and listen to music. Qualcomm wants to stop Broadcom's sale of the processors and bar its executives from working in the field while its lawsuit proceeds. A federal judge said the request was too broad, and he ordered the two companies to work together on a less restrictive injunction.

"I'm not interested in an injunction that bars God knows what for however many years, and that's apparently what Qualcomm wants," U.S. District Judge Rudi Brewster said in a hearing Monday in San Diego federal court. "It's an extraordinary request and I hesitate to do that."

Qualcomm claims that Broadcom stole documents on how to manage power in handsets, a crucial issue because handset makers want to add applications such as videos and music without shortening battery life. The case is one of many fronts in a battle between the companies as Broadcom seeks favorable licensing terms to make cellphone chips. The two sides must present a joint preliminary injunction at a hearing scheduled for Oct. 27, Brewster said.

Charles Bullock, an administrative law judge at the International Trade Commission, is scheduled to decide Oct. 10 whether the government should bar some Qualcomm-powered phones from the U.S. Broadcom, which makes chips for television set-top boxes, is trying to expand into cellphones and has accused Qualcomm of patent violations.

A victory for Broadcom may threaten Qualcomm's dominance of the U.S. market for so-called 3G, or third-generation, wireless handsets, a market that exceeded $1 billion last year. Qualcomm collects royalties on sales of all 3G phones.

Shares of Qualcomm fell $1.69 to $34.66 and Broadcom shares climbed 51 cents to $30.85.

Broadcom attorney David Rossman called the judge's ruling a victory. Qualcomm attorney Alex Rogers said Broadcom had agreed to a narrower injunction "because they know they did something wrong."

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