Chip Makers’ Feud Continues in Court
The first trial in the bitter patent feud between giant computer chip maker Intel Corp. and Broadcom Corp. begins today. In the federal lawsuit, Intel targets much of the $1 billion in annual sales racked up by the smaller communications chip maker.
Intel charges that “nearly every aspect” of Irvine-based Broadcom’s business violates five Intel patents and that Broadcom has constructed a “carefully crafted plan” to build its business using the Santa Clara, Calif., company’s technology.
“This is a fairly broad lawsuit that touches on a majority of their products,” Intel spokesman Chuck Mulloy said. Broadcom spokesman Bill Blanning downplayed the potential damage and said his company expects to prevail.
Neither would comment on a possible settlement of the case, one of four patent and trade-secrets actions the companies have filed against each other in the last two years. One was settled before trial.
Today’s trial, in U.S. District Court in Wilmington, Del., will be the first time the two have taken their dispute before a jury.
Industry analysts have called the litigation a “grudge match” between the two companies, a fight for market share as Intel ventured into Broadcom’s domain.
Wall Street barely reacted to the impending trial. Intel shares gained 44 cents to close at $32.31, and Broadcom lost 7 cents to close at $49.92, both on Nasdaq.
Intel had sales of $33 billion last year making semiconductors and microprocessors, including the Pentium line of chips, for equipment such as personal computers, video games, cameras, toys and CD players. Broadcom makes chips for television set-top boxes, high-speed modems, satellite systems and other electronics.
The Delaware case, which seeks unspecified monetary damages and an order halting the alleged infringement, was split into two trials to make it more understandable for jurors. The first involves two patents, one on a networking chip and one on a digital video chip. The next trial will cover patents on two digital video chips and on packaging, as well as Broadcom counterclaims of unfair business practices and abuse of industry standards.
Though neither side would expand on the few comments they made, Broadcom Chief Executive Henry T. Nicholas III blasted Intel and its tactics shortly after the lawsuit was filed in August 2000.
Nicholas, contending that Intel was resorting to “specious litigation” rather than competition, said Broadcom conforms to widely followed industry standards and did not infringe the video chip and chip packaging patents. The networking patent, he said, was so obsolete that his company couldn’t find any products that relate to it.
Two years ago, Intel filed a patent infringement claim against Altima Communications Inc., a company Broadcom later acquired. The International Trade Commission last month barred Broadcom from importing the chips at issue. The White House is to review the case.
Intel, an early investor in Broadcom, went to court last year to try to block former employees from working at Broadcom, charging that the Orange County company had acquired trade secrets when three Intel workers changed companies. The case was settled out of court last November.
While that case was pending, Intel filed the sweeping patent lawsuit challenging basic Broadcom communications chips.
Last week, Broadcom filed a federal lawsuit in Texas challenging key components of Intel’s business. Broadcom contends that Intel is infringing two of its patents for support graphics chipsets, which are needed to operate personal computers. The case is pending.
