Federal Lawsuit Claims Qualcomm's Licensing and Other Practices in Cellular Technology and Products Violate the Antitrust Laws, Stifle Competition
IRVINE, Calif., July 5, 2005 /PRNewswire-FirstCall via COMTEX/ -- Broadcom Corporation (Nasdaq: BRCM), a global leader in wired and wireless broadband communications semiconductors, announced today that it has commenced litigation against Qualcomm Incorporated (Nasdaq: QCOM) 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.
Broadcom Corporation is a global leader in wired and wireless broadband communications semiconductors. Our products enable the convergence of high-speed data, high definition video, voice and audio at home, in the office and on the go. Broadcom provides manufacturers of computing and networking equipment, digital entertainment and broadband access products, and mobile devices with the industry's broadest portfolio of state-of-the-art system-on-a-chip and software solutions. These solutions support our core mission: Connecting everything®.
Broadcom is one of the world's largest fabless semiconductor companies, with annual revenue of more than $2 billion. The company is headquartered in Irvine, Calif., with offices and research facilities in North America, Asia and Europe. Broadcom may be contacted at 1-949-450-8700 or at www.broadcom.com.
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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 include, but are not limited to, our ability to prevail in the federal antitrust action against Qualcomm and to secure fair, reasonable and non-discriminatory licensing terms as well as a fair competitive environment in the markets for 3G cellular chipsets; our ability to prevail in our patent lawsuits and the United States International Trade Commission proceeding against Qualcomm; the ability of our patents to protect our intellectual property; our ability to enforce our intellectual property rights; and the risks associated with litigation in general, including the costs, expenditures and time that must be devoted to litigation as well as the possibility of adverse results and the potential diversion of management's attention that may result from being engaged in litigation. 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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