Appeals court tosses Broadcom win, ITC can't ban Qualcomm imports

To paraphrase Yogi Berra, "It ain't over." As the wireless industry's most significant brawl brings itself to a boil once again, the victory upon which Broadcom had pinned its hopes has been eliminated by an appeals court ruling.

In a decision that could completely even the score between long-feuding Qualcomm and Broadcom, the Federal Circuit Court of Appeals on Tuesday threw out a December 2006 decision of the US International Trade Commission, upholding a ruling of patent infringement on Broadcom's power-saving technology by Qualcomm.

With that decision now nullified, the USITC now cannot impose an injunction against the import of anyone else's cellular technology into the United States that happens to use certain Qualcomm chips.

The 2006 trade court decision found Qualcomm to have infringed upon one of three Broadcom patents being contested at the time. Called the "'983 patent" for short, it specifically deals with combination wired/wireless transceivers that are capable of maintaining two different connections simultaneously, and switching the main connection to whichever of the two required the lowest power to maintain.

The key word in the above sentence is "different." It's the same word Broadcom used in its patent to describe the nature of the two connections with respect to one another. While the ITC interpreted the term in the context of the patent to mean a specific type of difference, Qualcomm argued on appeal that the term is actually, by its very nature, much more broad. And because it's so broad, it may not be all that defensible.

Sometimes broad stretches of logic work. This time, Qualcomm's reasoning went like this: Because "different" could be interpreted broadly, and it's up to the companies that purchase and use Qualcomm chips in their own handsets to do that interpretation for themselves...Broadcom may have sued the wrong party.

That argument actually did not jive with the Appeals Court, which found that the ITC was actually correct in concluding that "different" implied a specific difference in the context of Broadcom's patent. If that had been Qualcomm's argument, the appeal might have been thrown out and the Broadcom win would have prevailed.

But Qualcomm's argument actually had four parts, and it was part four that made the grade. An earlier ruling of the same Appeals Court in an unrelated case made it clear that, in cases where patent infringement is claimed on the part of companies that resell goods made by the infringer (or, in the court's alternate language, the "inducer" of infringement), the infringer must have "affirmative intent" to cause the resellers to do the dirty deed.

Applied to this case, Qualcomm would need to have willfully induced, for instance, Kyocera (a Qualcomm customer and a party to this particular suit) to sell handsets with Qualcomm chips with the express purpose of harming Broadcom -- an act similar to handing someone a knife and begging him to go stab the fellow standing on the other side of the room.

"Although thought to be proper at the time, the approach adopted by the ITC is improper under this court's decision in [the prior case]," reads the Appeals Court's decision Tuesday (PDF available here). "Proof of intent to cause infringing acts is a necessary but not sufficient condition for induced infringement. Inducement additionally requires 'evidence of culpable conduct, directed to encouraging another's infringement,' i.e., specific intent to encourage infringement...This specific intent may, of course, be demonstrated by circumstantial evidence such as that presented by Broadcom. But the ITC's conclusion that 'Qualcomm intends to induce infringement because it provides its customers with the system determination code' evinces, at most, a finding that Qualcomm generally intended to cause acts that produced infringement. Thus, the current record falls short of the necessary intent showing for inducement -- that Qualcomm possessed a specific intent to cause infringement of Broadcom's patent."

And with that, the biggest single victory in the Qualcomm/Broadcom war to date came toppling down in a heap of unresolved difference. In a statement late Tuesday, Qualcomm general counsel Don Rosenberg said, "In effect, the Court has disapproved Broadcom's tactic of attacking the wireless industry, including handset manufacturers and wireless operators, without providing them with the opportunity to defend themselves in the action."

The case of the '983 patent was effectively remanded back to the ITC for review, but with the Appeals Court having set a new standard, it's unlikely the trade court will reach the same verdict it did before.