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San Diego Federal Court Finds That Qualcomm Engaged in Aggravated Litigation Misconduct and Intentional Abuse of Industry Standards
Aug 07, 2007 (08:08 AM EDT)

IRVINE, Calif., Aug. 7 /PRNewswire-FirstCall/ -- Broadcom Corporation , a global leader in semiconductors for wired and wireless communications, today announced that a San Diego federal court ruled yesterday that Qualcomm Incorporated engaged in aggravated litigation misconduct and standards abuse with respect to two Qualcomm patents that relate to digital video technology. The court ruled that Qualcomm has thereby waived its rights to enforce all claims of the two patents and any continuations, continuations-in-part, divisions, reissues, or any other derivatives of those patents. The court also ordered Qualcomm to pay all of Broadcom's reasonable attorneys' fees, court costs, expert witness fees, travel expenses and any other litigation costs reasonably incurred by Broadcom in defending the patent infringement case that led to the rulings.

Citing the misconduct of Qualcomm's employees, witnesses, and counsel before, during and after trial, the court found that "Broadcom proved this to be an exceptional case by clear and convincing evidence based on (1) Qualcomm's bad faith participation in the H.264 standard-setting body, the Joint Video Team (JVT); and (2) the litigation misconduct of Qualcomm through its employees, hired outside witnesses, and trial counsel during discovery, motions practice, trial and post-trial proceedings." According to the court, "Qualcomm closely monitored and participated in the development of the H.264 standard, all the while concealing the existence of at least two patents it believed were likely to be essential to the practice of the standard, until after the development was completed and the standard was published internationally. Then, without any prior letter, email, telephone call, or even a smoke signal, let alone attempt to license Broadcom, Qualcomm filed the instant lawsuit against Broadcom for infringement of the '104 and '767 patents."

"The court's findings indicate that this is one of the most serious and egregious cases of standards abuse and litigation misconduct that our industry has ever witnessed," said David J. Rosmann, Broadcom's Vice President of Intellectual Property Litigation. "While we are gratified with the court's ruling, we are also disappointed that Qualcomm chose to stoop to such tactics."

"Aggravated Litigation Abuse"

In a 54-page opinion ( ), the court exhaustively chronicles Qualcomm's systematic misconduct from its early participation in the H.264 standards body in 2002 through the trial with Broadcom in early 2007. In commenting on Qualcomm's abuse, the ruling states, "Merely the reiteration of the chronology of events above and below tells the story of the gravity of the misconduct. The facts speak for themselves." The court went on to say:

"The track of this conduct following the adoption of the H.264 standard exposes aggravated litigation abuse. This abuse commenced with Qualcomm's abrupt commencement of suit, then continued (1) in discovery through Qualcomm's constant stonewalling, concealment, and repeated misrepresentations concerning corporate documentary evidence that would have revealed the fullness of the corporate plan; and (2) in trial through Qualcomm's presentation of numerous witnesses who steadfastly testified falsely denying even the awareness, let alone the participation in the JVT project and through the actions of Qualcomm's lead and co-counsel up to the time Qualcomm substituted new lead counsel, who adamantly denied the obvious and then, when the truth was discovered and exposed by document production, sequentially contended denial of relevance, justification, mistake, and finally non-awareness."

"Misconduct of Qualcomm, Its Employees, and Its Witnesses"

The court determined "by clear and convincing evidence that Qualcomm, its employees, and its witnesses actively organized and/or participated in a plan to profit heavily by (1) wrongfully concealing the patents-in-suit while participating in the JVT and then (2) actively hiding this concealment from the Court, the jury and opposing counsel during the present litigation."

The court also found that "Qualcomm's standard-setting misconduct with the JVT was indeed serious and suggests extremely sophisticated foul play on the part of Qualcomm and its employees."

"Misconduct of Qualcomm Counsel"

Additionally, the court determined "by clear and convincing evidence that Qualcomm counsel participated in an organized program of litigation misconduct and concealment throughout discovery, trial and post-trial before new counsel took over the lead role in the case on August 27, 2007" and further that Qualcomm and its witnesses knowingly attempted in trial to conceal evidence.

"The Carefully Orchestrated Plan and the Deadly Determination of Qualcomm"

The court concluded, "In light of all the above evidence finally revealed, the eventual collapse of Qualcomm's concealment efforts exposes the carefully orchestrated plan and the deadly determination of Qualcomm to achieve its goal of holding hostage the entire industry."

"The gross misconduct that came to light in this case just scratches the surface of Qualcomm's pervasive and systematic schemes to distort industry standards-setting processes and highlights the extreme lengths to which they will go to conceal their illegal behavior from regulatory and legal authorities," continued Mr. Rosmann. "Qualcomm's ongoing misconduct threatens competition and innovation in the cellular industry, and consequently we intend to aggressively pursue these other instances of Qualcomm's standards abuse."

Qualcomm filed the case in San Diego federal court in October 2005, alleging that Broadcom products complying with the H.264 digital video compression standard infringed two Qualcomm patents. In January 2007, a unanimous jury found that Broadcom did not infringe the patents, and further recommended that the court find that Qualcomm misled an industry standards-setting body known as the JVT by failing to disclose the patents related to the H.264 standard.

The court adopted the jury's finding regarding standards abuse in a March 2007 decision and held a hearing in June to determine the appropriate remedy for that abuse.

Broadcom has also filed a motion for sanctions for Qualcomm's litigation misconduct in the patent case. A hearing on that motion was conducted July 26, and the parties await a ruling.

Other Litigation

In April 2007 Broadcom filed a complaint in California state court against Qualcomm asserting unfair competition, fraud and breach of contract claims related to Qualcomm's abuse of the intellectual property rules of various industry standards-setting bodies. The complaint alleges that Qualcomm has engaged in a pattern of misconduct across multiple technologies and multiple standards bodies, including those responsible for setting cellular, video, and mobile broadband standards, and that Qualcomm's misconduct includes improperly concealing its patents, reneging on licensing obligations, and exerting dominance through hidden affiliations.

Broadcom has also joined five other leading mobile wireless technology companies in filing complaints with the European Commission alleging that Qualcomm has engaged in anticompetitive conduct in the licensing of its patents and the sale of its chipsets for mobile wireless devices and systems. The six companies assert that Qualcomm is violating EU competition law and failing to meet the commitments it made to international standards bodies to license its technology on fair, reasonable and non-discriminatory terms. Broadcom and other wireless technology companies have filed similar complaints before the Korean Fair Trade Commission. Broadcom is also appealing last year's dismissal of its federal antitrust lawsuit against Qualcomm. The dismissal, by a U.S. District Judge in New Jersey, was appealed to the U.S. Court of Appeals for the Third Circuit. A hearing was held in June, and the parties await a ruling in the appeal.

While Broadcom continues to pursue its claims against Qualcomm regarding patent infringement, anti-competitive behavior and fraud issues, Qualcomm has either lost or withdrawn all of its claims against Broadcom.

About Broadcom

Broadcom Corporation is a major technology innovator and global leader in semiconductors for wired and wireless communications. Broadcom products enable the delivery of voice, video, data and multimedia to and throughout the home, the office and the mobile environment. We provide the industry's broadest portfolio of state-of-the-art, system-on-a-chip and software solutions to manufacturers of computing and networking equipment, digital entertainment and broadband access products, and mobile devices. These solutions support our core mission: Connecting everything(R).

Broadcom is one of the world's largest fabless semiconductor companies, with 2006 revenue of $3.67 billion, and holds over 2,200 U.S. and 900 foreign patents, more than 6,600 additional pending patent applications, and one of the broadest intellectual property portfolios addressing both wired and wireless transmission of voice, video and data.

Broadcom is headquartered in Irvine, Calif., and has offices and research facilities in North America, Asia and Europe. Broadcom may be contacted at +1.949.926.5000 or at .

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995:

All statements included or incorporated by reference in this release, other than statements or characterizations of historical fact, are forward- looking statements. These forward-looking statements are based on our current expectations, estimates and projections about our industry and business, management's beliefs, and certain assumptions made by us, all of which are subject to change. Forward-looking statements can often be identified by words such as "anticipates," "expects," "intends," "plans," "predicts," "believes," "seeks," "estimates," "may," "will," "should," "would," "could," "potential," "continue," "ongoing," similar expressions, and variations or negatives of these words. These forward-looking statements are not guarantees of future results and are subject to risks, uncertainties and assumptions that could cause our actual results to differ materially and adversely from those expressed in any forward-looking statement.

Important factors that may cause such a difference for Broadcom in connection with our litigation with Qualcomm include, but are not limited to, our ability to prevail in the various federal and state lawsuits and other proceedings against Qualcomm, including any appeals; the ability of our patents to protect our intellectual property and products; our ability to enforce our intellectual property rights; and the risks associated with litigation in general, including the costs and time that must be devoted to litigation, the potential diversion of attention of management and key employees that may result from being engaged in litigation, and the possibility of adverse results.

Our Annual Report on Form 10-K, subsequent Quarterly Reports on Form 10-Q, recent Current Reports on Form 8-K, and other Securities and Exchange Commission filings discuss the foregoing risks as well as other important risk factors that could contribute to such differences or otherwise affect our business, results of operations and financial condition. The forward-looking statements in this release speak only as of this date. We undertake no obligation to revise or update publicly any forward-looking statement for any reason.

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Broadcom Business Press Contact Bill Blanning Vice President, Global Media Relations 949-926-5555 Broadcom Financial Analyst Contact T. Peter Andrew Vice President, Corporate Communications 949-926-5663

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