High Court Narrows Penalty Against Qualcomm

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A federal appeals court on Monday narrowed the penalty against Qualcomm for misleading a standards body and committing misconduct during a trial.

The U.S. Court of Appeals for the Federal Circuit, in Washington, D.C., upheld a lower court's ruling last year that Qualcomm broke the rules of the Joint Video Team (JVT) by not disclosing patented technology that it contributed to the H.264 video standard. But the court rejected the remedy imposed by the lower court, which kept Qualcomm from enforcing the patents at all. The appeals court said Qualcomm should be barred from enforcing the two patents, but only when they are used in products using the H.264 standard.

The H.264 compression standard is widely used for video, especially on the Web, and was developed by the JVT. The case came about after Qualcomm sued Broadcom, a rival communications chip maker, alleging infringement of two of its patents. Broadcom argued that Qualcomm had worked within the JVT to get those patents included in the standard without disclosing this to the JVT as required. Typically, patented technology can be included in standards but must be licensed on "fair, reasonable and non-discriminatory" terms.

Last year, a jury in the U.S. District Court for the Southern District of California found that Qualcomm had violated the JVT's rules, and committed misconduct in the trial against Broadcom by failing to produce documents and giving inaccurate testimony. On that basis, District Court Judge Rudi Brewster ruled that Qualcomm couldn't enforce the patents against Broadcom or anyone else, in any circumstances. The judge also ordered Qualcomm to pay Broadcom's attorney fees.

On Monday, the appeals court upheld Brewster's rulings on Qualcomm's misconduct at the JVT and in the trial, as well as the penalty of paying attorney fees. But the court said that keeping Qualcomm from enforcing the patents under any circumstances was too broad. It vacated that decision and told the lower court to enter an unenforceability judgment remedy that is limited to products that use the H.264 standard.

Qualcomm has said it is disappointed with the ruling but pleased that the court ordered a narrower scope for the remedy.

Broadcom said Monday it believes Qualcomm has violated the rules of cellular standards bodies as well. In 2006, the IEEE 802.20 standards group was dissolved after allegations that Qualcomm was improperly trying to dominate the process of developing a wide-area wireless standard. Jerry Upton, then chairman of the group, had identified himself as an independent consultant but later admitted he worked as a consultant for Qualcomm.

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