Broadcom Wins 3rd Circuit Appeal of Lower Court’s Qualcomm Antitrust Decision
Broadcom notched another victory against Qualcomm late Tuesday, winning a reversal of a federal court decision to dismiss two Broadcom antitrust claims against Qualcomm. The U.S. Appeals Court for the 3rd Circuit sent back to district court a claim that Broadcom had monopolized the W-CDMA technology market and another that Qualcomm had engaged in anticompetitive conduct with intent to monopolize. The case goes back to the U.S. District Court for New Jersey. A trial date “depends on various next steps taken by Qualcomm,” but could be at least a year away, a Broadcom spokesman said.
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The ruling is “another hit for Qualcomm in the litigation web being spun between the two companies,” said Stifel Nicolaus’ Rebecca Arbogast. It also “echoes some of the plot line” from a U.S. District Court decision in San Diego in August that Qualcomm committed misconduct in dealing with a standards setting body. If Broadcom can prove in New Jersey Qualcomm’s failure to license on reasonable terms, Broadcom probably will take the decision to other jurisdictions, she said.
Broadcom called the decision a win. “We have already seen a finding of standards abuse against Qualcomm in a patent case in San Diego federal court, and are optimistic that we will prevail in New Jersey as well,” said David Dull, Broadcom’s general counsel. Qualcomm took the ruling in stride, saying it’s “mindful that the court was required by settled procedural rules to accept as true at this stage of the case all allegations made by Broadcom in its complaint.” Qualcomm “vigorously disputes” the remaining claims and is “confident that judgment will ultimately be entered in its favor on the entire complaint,” it said.
Broadcom’s original eight-claim complaint, filed July 1, 2005, with the New Jersey court, claimed Qualcomm violated antitrust laws when it violated intellectual property rights policies of standards-setting bodies by demanding discriminatorily higher W-CDMA royalties from rivals and customers not using Qualcomm chipsets. Broadcom also alleged that Qualcomm’s acquisition of rival Flarion was an attempt to extend monopolies into future standards generations. The court granted a Qualcomm motion to dismiss for failure to sufficiently construct any of the claims. Broadcom appealed four of the rulings and argued its case June 28.
Broadcom’s first two claims are valid, the circuit court said Tuesday. A company’s deceptive commitment to a standard-setting body “may constitute actionable anti- competitive conduct,” the circuit court said. Broadcom’s first claim, monopolization of W-CDMA technology markets, is therefore valid, it said. And Broadcom’s attempted monopolization claim was adequately stated, contrary to the district judge’s ruling, the appeals court said.
The district court correctly dismissed Broadcom’s other two claims, the circuit court said. Broadcom lacks standing to assert that Qualcomm maintained a monopoly in the markets for 3G CDMA chipsets and technology. “Broadcom’s alleged injury is not ‘inextricably intertwined’ with Qualcomm’s alleged anticompetitive conduct,” it said. And the district court was “undoubtedly correct” to dismiss Broadcom’s claim that the Flarion acquisition violated antitrust laws, the circuit court said. “Any ‘directly harmful effects’ resulting from Qualcomm’s acquisition of Flarion will be experienced by firms competing in the markets for the development” of future standards generations, it said. Broadcom might only experience “secondary injury” from the acquisition, but that theory is based on assumptions, it said. “Hypothetical anti-competitive conduct, speculative monopoly power, and remote injuries do not merit the extreme remedy of divestiture.”