Shares of Irvine chipmaker Broadcom Corp. rose as high as 3% in New York trading and then closed flat on Wednesday as investors reacted to news that a judge ordered rival Qualcomm Inc. to stop making and selling some chips for cell phones.
The injunction against San Diego-based Qualcomm was issued late Monday by U.S. District Judge James Selna in Santa Ana.
The case stems from litigation in which a Santa Ana jury in May found Qualcomm liable for infringing on three Broadcom cellphone chip patents. It awarded Broadcom nearly $20 million in damages and fees.
The judge also ruled that Qualcomm can continue to sell other disputed chips until January 2009 but must pay royalties on them to Broadcom.
The banned Qualcomm chips are used mainly in phones from AT & T; Inc. and Deutsche Telekom AG’s T-Mobile.
Qualcomm said it expects an “immediate, short-term impact” from the ruling. The company is considering an appeal of the injunction.
It hopes to come up with “workarounds” to sidestep the Broadcom patents, Qualcomm said.
Broadcom and Qualcomm have been fighting over cell phone chips since early 2005, with Broadcom coming out ahead so far.
The company has filed five lawsuits or complaints with trade regulators. They range from patent disputes to a lawsuit attacking Qualcomm’s business of licensing cell phone chip technology and collecting royalties.
Qualcomm filed one suit against Broadcom in which it lost and was ordered to pay Broadcom $9 million in legal fees.
In early 2007, a jury decided that Broadcom hadn’t infringed on two Qualcomm patents and that Qualcomm withheld information from an industry group that sets standards for chips.
