Mobile technology giant Qualcomm has agreed to pay smaller competitor Broadcom some $891 million over four years to settle a series of long-running—and very bitter—technology patent disputes between the company. Under the deal, the companies will dismiss all patent litigation between them, and agree not to assert patents against each other’s chip products and selected other products and services; Broadcom will also withdraw its complaints to the European Commission and the Korea Fair Trade Commission over Qualcomm business practices.
In return, Qualcomm will pay $200 million to Broadcom in the current fiscal quarter, and a total of $891 million over four years. No payments are currently scheduled beyond the first.
“Today’s settlement allows both companies to move on with their business and compete in the semiconductor sector as two of its innovation leaders,” said Broadcom president and CEO Scott McGregor, in a statement. “We have set aside our differences while addressing the needs of our customers, our shareholders and the industry. In addition, the companies have worked together to achieve their mutual goals of improving the competitive dynamics of the industry.”
Although the settlement is expensive for Qualcomm, industry watchers generally see it as a smart move, since it eliminates uncertainty about the future of Qualcomm products. Qualcomm had recently lost several battles in its patent litigation with Broadcom, including an injunction granted in early 2008 over 3G technologies (Qualcomm was later found in contempt). Broadcom initially launched its complaints in 2005.
The two companies had apparently been in serious negotiations for some weeks; Qualcomm rescheduled its quarterly earnings call last week, noting it was in advanced settlement talks with Broadcom.
