SAN FRANCISCO — Broadcom and Qualcomm had little use for peace in their huge patent fight over the past four years. But when two new legal chiefs took over at the Southern California chip rivals, something changed.
Broadcom’s Arthur Chong, hired in November, and Qualcomm’s Donald Rosenberg, who’d been hired in 2007 after that company’s aggressive litigation strategy suffered a series of setbacks, began talking in January, Chong said. The result of those talks: The companies announced Sunday night that Qualcomm will pay Broadcom $891 million over four years as part of an agreement to end several patent and antitrust cases against each other.
“I think that the discussions had stalled and that my arrival was an opportunity to provide a new catalyst,” said Chong, adding that he first called Rosenberg to meet for lunch.
“Read your own tea leaves — there’s certainly value in fresh perspectives,” said Adit Khorana, a Wilson Sonsini Goodrich & Rosati lawyer who represented Broadcom in the deal.
The fight got started in 2005 when Broadcom started to challenge Qualcomm’s aggressive licensing efforts in the courts. Led by William Lee and his colleagues at Wilmer Cutler Pickering Hale and Dorr, Broadcom sued Qualcomm in California and Washington, D.C., for patent infringement, and in New Jersey for antitrust violations.
Qualcomm answered with lawsuits of its own but didn’t have much success. Broadcom won patent cases in Santa Ana and San Diego district courts. The San Diego case yielded sanctions against Qualcomm and its lawyers at Day Casebeer Madrid & Batchelder and Heller Ehrman for not turning over crucial e-mails during discovery. Then-Qualcomm GC Louis Lupin resigned after those discovery problems surfaced.
Broadcom and Qualcomm will exchange patent rights as part of the settlement. Qualcomm’s Rosenberg emphasized in the press Monday that the settlement wouldn’t affect the company’s licensing campaign, which is directed not only at chip makers but atcell-phone manufacturers that use the chips as well.
Rosenberg told Reuters, for instance, that even if Qualcomm does not assert patents against Broadcom, it can still collect royalties from cell-phone companies that use Broadcom’s chips.
But some legal observers say that might not be so easy, given recent decisions that limit so-called downstream licensing.
“His comment that ‘Well, we can’t get after Broadcom, but we can go after their customers,’ I don’t know about that,” said Ronald Laurie, of IP consulting firm Inflexion Point Strategies. “It’s less certain than it used to be.”
Both sides used several firms for litigation. After dumping Heller and Day Casebeer, Qualcomm turned to DLA Piper, but eventually handed most of its cases to Cravath Swaine & Moore’s Evan Chesler.
The settlement, however, was led by Silicon Valley lawyers: Cooley Godward Kronish’s Eric Reifschneider led a team representing Qualcomm. Wilson Sonsini’s Khorana and Michael Murphy represented Broadcom.
For the last two weeks, the sides held meetings in a Cooley Godward conference room in Palo Alto every day, often lasting 18 hours, said Khorana. Although Qualcomm announced it would delay its earnings report last week because it was close to a deal, lawyers were careful to keep the settlement talks quiet. Khorana said his side referred to the deal as “Project Koala.”