Wireless chipmaker Qualcomm Inc.said on Wednesday an unfavorable ruling in a patent dispute with Broadcom Corp would hurt its business in the short term, sending its shares lower.
A federal judge in California ruled on Monday that Qualcomm could sell through January 2009 some chips whose designs infringe three patents held by Broadcom, though it must pay royalties. After that, Qualcomm was permanently barred from infringing the three Broadcom patents.
The judge also issued an immediate injunction on WCDMA products that were found to infringe Broadcom's video encoding patent. Qualcomm said on Monday it expects to have new WCDMA chips in cell phones before the end of March.
Qualcomm said it is evaluating its options regarding the ruling, including stays and appeals.
While Qualcomm will attempt to obtain further relief and clarity from the court on certain aspects of its order, the inability to obtain such relief will have an immediate short-term impact as handset customers transition to new designs for WCDMA products, Chief Executive Paul Jacobs said on an analyst call.
WCDMA is a cell phone technology that provides high-speed Internet connections and is used by carriers around the world.
Qualcomm said newer chipsets that do not infringe Broadcom patents are available to device manufacturers for product shipment in the United States. Chipsets for devices aimed at international markets are not affected by the ruling.
We are working to comply fully with the court ruling while minimizing the impact on our partners, said Alex Katouzian, vice president of Qualcomm CDMA Technologies.
Qualcomm shares traded 85 cents, or 2.16 percent, lower at $38.50, while Broadcom rose $1.20, or 4.6 percent, to $27.34.
(Reporting by Ritsuko Ando and Franklin Paul; Editing by Steve Orlofsky)