Patent Litigation: Qualcomm v. Broadcom: A Duty to Disclose Patents to Standards-Setting Organizations and Broadcom's Recovery of Attorney Fees.

In a December 1, 2008 decision in Qualcomm, Inc. v. Broadcom Corp., the United States Court of Appeals analyzed the duty of a products manufacturer to disclose patents prior to bringing suit against an adopting competitor. In review of the lower court decision of the United States District Court for the Southern District of California (Case No. 05-CV-1958), the Court's opinion helps define appropriate and legal behavior in the confusing area of standards-setting organizations ("SSO"). The SSOs are widely used in the technology industry to ensure, for example, that all lamp plugs can fit into the same electrical outlet. The lower court, in a 2007 opinion by Southern District of California Judge Rudi Brewster, punished Qualcomm for not disclosing patents to a standards-setting body and then suing adopters of that standard, namely Broadcom. The patents related to video compression technology and a standard developed by a Joint Video Team SSO ("JVT") that came to be known as the H.264 standard.

The district court concluded that Qualcomm had breached its duty to disclose certain patents to the SSO and as a remedy ordered that the patents (as well as related patents) were unenforceable against the world. Additionally, the lower court awarded Broadcom its attorney fees in the litigation (which exceeded $8.5 million) because of the pre-litigation misconduct by Qualcomm as well as for Qualcomm's misconduct (e.g., repeated false claims by Qualcomm witnesses and its attorneys and failure to produce key e-mail documents) in discovery proceedings in the case. The Court of Appeals affirmed the district court's rulings with the exception that it found the patent unenforceability remedy too broad as it was not limited to the SSO context at issue and remanded instructing the court to limit the remedy in scope to H.264-compliant products. The award of attorney's fees was made under 35 U.S.C. Section 285 which provides that a United States District Court "in exceptional cases may award reasonable attorney fees to the prevailing party". The case besides shedding some light upon disclosure duties of companies working with standards organizations, show the contentious nature of litigation concerning new and lucrative technologies and an example of abuse of the system by a win at all costs mentality. An interesting side topic concerns the use of attorney fee award(s) as a means to deter misconduct in litigation and as a means to compensate aggrieved parties which will be discussed in my next post.