Court revives suit against Qualcomm

A U.S. appeals court Tuesday revived most of a Broadcom Corp. antitrust lawsuit accusing Qualcomm Inc. of stifling competition for chips that run mobile telephones.

Broadcom claimed that Qualcomm, the world’s second-biggest maker of chips for mobile phones, refused to license its patents on fair terms to would-be competitors. A federal judge had dismissed the lawsuit, but the U.S. 3rd Circuit Court of Appeals reversed that decision.

The ruling is another blow to San Diego-based Qualcomm, which has been fighting Broadcom’s plans to challenge its share of the market for chips that run mobile phones.

In July, Irvine-based Broadcom won a ruling to have U.S. imports of cellphones containing Qualcomm’s latest chips halted because they violated Broadcom patents. It also has won jury verdicts in two federal patent infringement trials involving Qualcomm this year.

The appellate decision came after the markets closed. Broadcom shares rose 94 cents to $35.44. Qualcomm rose 12 cents to $40.01.

The antitrust lawsuit accused Qualcomm of persuading an industry group setting standards for certain mobile-phone chips to include Qualcomm technology by promising to license its patents to anyone who complied with the standard.

Instead, Broadcom claimed, Qualcomm committed “patent hold-up” by charging higher rates to anyone who didn’t use its chips.

Qualcomm’s pledge to license its patents on fair terms “was an essential part of its competitive effort to win inclusion of its patented technology” in the standard, the appeals court said. “Conduct that impairs the opportunities of rivals and either does not further competition on the merits or does so in an unnecessarily restrictive way may be deemed anticompetitive.”

The court did uphold the dismissal of some Broadcom claims.

“We are pleased that we will get our day in court and will have the opportunity to show how Qualcomm’s conduct violates our nation’s antitrust laws,” said David A. Dull, Broadcom’s general counsel.

Qualcomm said that it “vigorously disputes Broadcom’s remaining allegations and is confident that judgment will ultimately be entered in its favor.”