Qualcomm, Broadcom settle patent dispute

Chip maker Qualcomm Inc. said late Sunday that it would pay Broadcom Corp. $891 million over four years to settle a long-standing dispute over patents and royalties.

The San Diego company said it would pay the first $200 million to the rival Irvine chip maker by the end of June.

The agreement dismisses with prejudice all litigation between the companies, including overseas, with Broadcom agreeing to withdraw its complaints to the European Commission and the Korea Fair Trade Commission.

Qualcomm said the terms of the agreement wouldn’t change its licensing revenue model for its third-generation and fourth-generation wireless technology. The company’s chip technology is used in many of the world’s cellphones, and it also licenses technology to wireless communications companies.

Under the agreement, the companies have granted certain patent rights to each other, but neither company’s customers receive rights to patents related to chip products incorporated into non-cellphone equipment.

“The settlement will allow us to direct our full attention and resources to continuing to innovate, improving our competitive position in this economic downturn, and growing demand for wireless products and services,” said Paul E. Jacobs, Qualcomm’s chairman.

“We have set aside our differences while addressing the needs of our customers, our shareholders and the industry,” said Scott A. McGregor, Broadcom’s chief executive.

Qualcomm had delayed its quarterly earnings report last week to complete the settlement talks. The company will post the results today.