Apple and Broadcom to pay US$1.1bn fine to Caltech for patent infringement

Photo: cultofmac.com

On Wednesday (29 Jan), Apple and Broadcom were both ordered by a Los Angeles jury to pay US$1.1 billion to a California university for infringing upon wifi technology patents, which is deemed to be one of the biggest patent verdicts ever.

Broadcom and Apple were ordered to pay US$270 million and US$837 million respectively to the California Institute of Technology (Caltech).

In 2016, Caltech sued both Apple and Broadcom on the premise that Apple products such as Apple Watches, iPhones and iPads all utilised Broadcom components which breached Caltech’s patents concerning wireless data transmissions.

The jurors dished a larger share of payment to Apple being that the company profits in the billions selling iPhones among other products that incorporated the technology. Broadcom on the other hand, made the chips at issue in the trial.

The technology analytical firm, Enderle Group’s analyst Rob Enderle remarked that “the patented technology as a piece of property that was stolen and sold to someone else…[and] It doesn’t matter if they had a go-between steal it for them, they were not allowed to benefit from a theft even if they were downstream.”

Past conflict

There is the question whether the relationship between Apple and Broadcom got stronger years ago amidst the legal conflict with Qualcomm, the US chip mammoth and if the relationship played into the jury’s decision, Mr Enderle thought.

Some industry watchers suspect that there was a hostile takeover campaign by Apple supporting Broadcom’s bid to buy over Qualcomm, which failed.

In 2018, due to national security concerns which resulted in President Donald Trump blocking the bid, Broadcom stopped trying to buy over Qualcomm.

The unsolicited offer from Broadcom had been rejected by Qualcomm, who manufactures many types of chips for electronic displays, wireless communications and set-top boxes.

Last year, the headquarters of Broadcom moved to California from Singapore.

In early last year, Apple and Qualcomm also sought to “dismiss all litigation” which was rooted in a conflict over royalty payments.

Consequences

With regards to the verdict, Apple and Broadcom intended to make an appeal.

Broadcom spoke to the international news agency Agence France-Presse (AFP) “While we thank the members of the jury for their service, we disagree with the factual and legal bases for the verdict and intend to appeal.”

Based on the court documents, Apple and Broadcom remarked that Caltech’s claims are premised “solely on the incorporation of allegedly infringing Broadcom chips in Apple’s iPhone, Mac, and other devices.”

However, court filings noted that “Broadcom manufactures the accused chips, while Apple is merely an indirect downstream party whose products incorporate the accused chips.”

Although Broadcom was the primary target of the lawsuit, Apple was also served as it is one of the largest customers of Broadcom.

As such, the court ruling was welcomed by Caltech: “As a nonprofit institution of higher education, Caltech is committed to protecting its intellectual property in furtherance of its mission to expand human knowledge and benefit society through research integrated with education.”

According to Mr Enderle, the lawsuit could extend to other customers of Broadcom which also utilise the chips at issue: “Caltech will go down the list of Broadcom customers and look for out-of-court settlements with anyone who used the compromised technology,” he pointed out.

Mr Enderle also noted the possibility that this current tech industry lawsuit will trigger “waves of patent wars” in the tech world.

“I think it’s a case where, after a period of time, people age out or forget that there are significant penalties for this stuff,” he concluded.

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