Looking back, we knew this day would come. For the last four years, Broadcom and Qualcomm have been litigating against each other with the chess-match strategic intensity of Cold War rivals, as we learned when we spent a few months in the fall of 2007 reporting and writing an American Lawyer cover story on the epic litigation. Trust us, these companies don't like each other. But we knew they couldn't sustain the pace and expense of litigation that literally spanned the globe. Qualcomm, which seemed to get beat up in case after case by Broadcom, simply could not justify paying hundreds of millions of dollars to the likes of Cooley Godward Kronish, DLA Piper, and Cravath, Swaine & Moore.
And so, on Sunday night, the two announced they had reached peace, agreeing to drop all litigation against each other. That's going to leave a gaping hole in the dockets of the International Trade Commission, the federal district court in Santa Ana, Calif., the European Commission, and the Korea Fair Trade Commission. The deal includes a multiyear patent agreement and requires Qualcomm to pay Broadcom $891 million over a four-year period. ... Qualcomm insists that nothing in the Broadcom settlement agreement will affect its highly profitable business model of licensing its technology. "We will be able to continue to operate as in the past," Qualcomm's general counsel, Don Rosenberg, told The San Diego Tribune. "But we're not standing around here thumping our chests."
Rosenberg said cutting legal costs was "clearly a factor" driving settlement talks. According to one estimate, Qualcomm was spending $100 million annually in its fight with Broadcom. ... "It's not unusual in a case like this, as you get near settlement, for there to be negotiated reductions in legal expenses," French said. "It's a natural course. If a company does not get its optimum desired result, needless to say, it is looking for how to minimize its total financial exposure."
Hundreds of millions of dollars down the rathole, and hundreds of millions more to be paid in the future--what a productive use of resources the patent system "stimulates". And to think--some pro-patent types want to foist this system on China -- one patent hawk raves: "The quality of patents issued in China is also improving. Revisions to the patent law that take effect in October strengthen the requirement for a patent's novelty, bringing it up to global standards. Stronger patents are easier to enforce, opening the door to more lawsuits." And that's a good thing? China, do not listen to Americans! on Tax policy, antitrust, or IP!
