Broadman sue Qualcomm to protect 3G

July 6, 2005

Broadcom announced that it has commenced litigation against Qualcomm alleging that the San Diego-based company's licensing and other practices related to cellular technology and products violate U.S. antitrust laws.

In a complaint filed in the United States District Court for the District of New Jersey, Broadcom asserts that the violations relate to Qualcomm's abuse of the wireless technology standards-setting process, its failure to meet its commitments to license technology for cellular wireless standards on fair, reasonable and non-discriminatory terms, and various anticompetitive practices of Qualcomm in the markets for cell phone technology and chipsets.

"Our goal is simply to ensure fair competition and a level playing field, not just for Broadcom, but for the entire cellular industry," said Scott A. McGregor, Broadcom's President and CEO. "Qualcomm's practices prevent that. Their monopoly in CDMA technology has increased the price of cell phones in the U.S., and we are hoping that the courts will prevent the same thing from happening with the next generation '3G' cell phones. Qualcomm's monopolistic activities limit competition, stifle innovation, and ultimately harm consumers and service providers."

Broadcom's complaint alleges that Qualcomm's licensing arrangements violate its commitments to provide fair, reasonable and non-discriminatory (so-called "FRAND") licensing terms to users of technology that is incorporated into telecommunications industry standards. Broadcom asserts that Qualcomm's licensing abuses include charging discriminatory royalties, collecting double royalties, and demanding overly broad cross-license rights from its licensees, among other things. Broadcom also alleges that Qualcomm is engaged in various exclusionary and anticompetitive practices in the supply of cell phone technology and chipsets. Broadcom asserts that the intended impact of these actions is to place competitors like Broadcom at a distinct disadvantage and to reinforce Qualcomm's dominant position in violation of U.S. antitrust laws.

In the complaint, Broadcom seeks monetary damages as well as a permanent injunction barring Qualcomm's unfair business practices. A copy of the complaint may be viewed at www.broadcom.com/qualcomm_antitrust.pdf .

"As the communications industry moves to unified networks that will enable more efficient voice and new high bandwidth data services to drive a new generation of smart portable devices with state-of-the-art features, Broadcom has some very compelling opportunities to participate in these exciting new markets," McGregor said. "Our goal in this legal action is to achieve a fair market environment in which companies compete based on the merits of their respective products and innovation rather than the muscle of a monopolist."

Separately pending between the parties are two patent lawsuits brought by Broadcom alleging that Qualcomm infringes 10 Broadcom patents related to wired and wireless communications and multimedia processing technologies. Additionally, the United States International Trade Commission has instituted an investigation into whether Qualcomm has engaged in unfair trade practices by importing integrated circuits and other products that infringe five Broadcom patents.