Transfer Pricing Associates

Broadcom Wins Permanent Injunction Against Emulex

post Wednesday April 11, 2012


Last week, the U.S. District Court for the Central District of California granted Broadcom Corporation's request for permanent injunction against certain Emulex products which Broadcom alleged infringed on their U.S. Patent Nos. 7,058,150 and 7,471,691.  Broadcom is a Fortune 500 semiconductor solutions company based in California who claimed that Emulex, a converged network solutions company also based in California, infringed on twelve of Broadcom’s patents.

Though Broadcom claimed twelve of their patents had been infringed, the U.S. District Court only found that Emulex had infringed on two.  Broadcom’s infringement claim for the '150 patent was that Emulex had used a "phase interpolator to optimize clock and data recovery in a high speed chip" while Broadcom’s infringement claim for the '691 patent was for "techniques used in fibre channel arbitrated loop networking." [Source: OrangeCountyPatentAttorney Blog]

With their injunction ruling, the U.S. District Court is allowing Emulex a "sunset period” during which it can complete sales to customers who had already placed orders.  During this sunset period, which will end in 2013, Emulex is allowed to complete sale orders, but they must also pay Broadcom a 9% royalty on those sales.  Emulex has also agreed to pay $600,000 in damages to Broadcom against its third-quarter fiscal 2012 results and has said that it is redesigning the infringing products. [Source: Reuters]

Arthur Chong, Broadcom's Executive Vice President, General Counsel and Corporate Secretary, said in his statement to the press that, "We are pleased with the Court's decision. The Court's decision recognizes the important principle that Broadcom should not have to compete against its own patents. Broadcom will continue to vigorously protect its intellectual property rights, including seeking permanent injunctions against its competitors' sale of infringing products where appropriate."  While CEO of Emulex, Jim McClutney, had his own statement to deliver about the case: "Emulex is dedicated to protecting the interest of its customers. We have been working with our suppliers to implement design changes to the SerDes modules included in the impacted products." [Source: OrangeCountyPatentAttorney Blog]

Broadcom’s patent-protected processes would fit under what we call “new generation intangibles” or new technological standard with an innovative way of usage.  Unfortunately with new generation intangibles, the economic lifetime is often no more than 1 to 2 years (the typically time it takes competition to adapt the new technology).  Broadcom has insulated itself from this new generation intangible life cycle by registering patents, but as more of their competition starts to invest in additional R&D and innovation, the semiconductor solutions company may begin to see many more infringements.


Image courtesy of renjith krishnan

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