Maybe it really is over: New Broadcom suit against Qualcomm tossed out
Southern California District Court Judge William Q. Hayes last Thursday dismissed without prejudice the latest claim brought by handset chip maker Broadcom against its principal rival in that market, Qualcomm. That claim was that Qualcomm, by means of its Subscriber Unit License Agreements (SULAs) passed on to reseller customers who purchase handsets made with Qualcomm chips, charges a second time for the use of patents it already charged the manufacturer for once.
It's a serious double-dipping claim, which if true, could hurt Broadcom and other competitors in the following way: A company that would double-dip in this manner wouldn't have to set its prices too high for the first dip in order to make a big profit. That could result in such a company undercutting its competitors who may only (assuming no one else double-dips as well) be profiting from the initial patent license to manufacturers.
The problem is, Broadcom had to make its case in a convincing way. It didn't help its cause when, in filing its complaint last October, it cited a case that had just been decided by the US Supreme Court -- a case involving Quanta, related only to Qualcomm in that the two companies begin with "Qua-." Broadcom attorneys then used the two companies' names interchangeably, using crafty phraseology to make it appear as though the high court had decided its case against Qualcomm...when what they really meant to say is that Quanta behaved like they allege Qualcomm did.
But that wasn't the biggest strike against Broadcom this time. As Judge Hayes ruled, Broadcom failed to demonstrate that it had been harmed by Qualcomm because it forgot to mention what, specifically, it was harmed with. Simply put, which patents did Qualcomm misuse?
"Each of Broadcom's grounds for declaratory relief is premised on the [previous] Court finding that Qualcomm 'patents that are or have been substantially embodied by the chipsets that Qualcomm sells,' or that are or have been 'substantially embodied by SULA-licensed handsets are exhausted,'" wrote the judge. "Although Broadcom acknowledges that Qualcomm possesses thousands of patents relating to wireless chipsets and handsets, Broadcom does not identify with any specificity the patents which it requests that the Court declare exhausted. In order to make a determination of exhaustion, the Court must determine that Qualcomm, the patentee, authorized the sale of a product, in this case a chipset or handset, that 'substantially embodies' a patent [and here, the judge cites the Quanta case, making clear he could tell the difference]. The Court cannot make this determination on the facts as alleged in the Complaint because Broadcom does not identify with any specificity a patent that was substantially embodied in a chipset or handset, or an exhaustion triggering sale or license."
What's more, the judge pointed out Broadcom's allegation that it was being threatened by future litigation brought on by Qualcomm unless it acted now in its own defense, but again, it couldn't point out what that litigation might focus on. Making clear that the latest patent reform rulings by the Supreme Court truly have taken hold, Judge Hayes closed by stating Broadcom had to prove it was owed royalties by Qualcomm, not just arbitrary penalties and damages.
A dismissal without prejudice does mean Broadcom could try this case again, but only after 1) specifying which royalties Qualcomm allegedly double-dipped on, and 2) arguing how that conduct impacted the market value of Broadcom licenses.