Court Upholds Patent Ruling Against Qualcomm - TheStreet

Updated from 1:20 p.m. EDT

A federal appeals court upheld a previous ruling that

Qualcomm

(QCOM) - Get Report

infringed on two patents held by

Broadcom

(BRCM)

, sending shares of the two companies in opposite directions.

The U.S. Court of Appeals for the Federal Circuit ruled alongside a lower court in a patent dispute case brought forth by Broadcom against Qualcomm. "

The district court did not abuse its discretion in issuing a permanent injunction," the Court of Appeals said in a release.

Broadcom claimed that baseband chips produced by Qualcomm that enable cell phones to run on high-speed 3G networks, using CDMA2000 and WCDMA technologies, infringed on patents it held. Qualcomm argued that because Broadcom makes WCDMA chips, not CDMA2000 products like Qualcomm, it could not have established "irreparable injury" from Qualcomm's sale of CDMA2000 chips.

The court found that Broadcom provided evidence of irreparable harm, despite the fact that it doesn't currently practice the claimed inventions. However, the court ruled a third patent involving video compression on cell phones was invalid and thus not infringed upon by Qualcomm.

"It was a mixed result and we're pleased with the court's decision to invalidate the one patent. We are disappointed that they found in favor of Broadcom on the other two patents," said Alex Rogers, senior vice president and legal counsel of Qualcomm. "We'll have to review our options in the appellate process. This decision is hot off the press, so we'll take our time in doing that."

Shares of Broadcom were lately up 5.9% at $19.47, while Qualcomm was down 1% at $45.49.

Broadcom originally filed the infringement complaint in May 2005. Late in 2007, U.S. District Court Judge James Selna issued an injunction against Qualcomm designed to stop the company from continuing its infringement of the three Broadcom patents. In August 2008, Judge Selna found Qualcomm in contempt of the injunction by failing to pay royalties to Broadcom.

"The appeals court's decision is a major victory for Broadcom in our ongoing effort to protect our intellectual property," said David Rosmann, Broadcom vice president of intellectual property litigation, in a statement.

In July, Qualcomm announced it has settled all litigation with

Nokia

(NOK) - Get Report

stemming from a separate dispute and entered a new agreement with the handset maker, enabling both companies to make and sell products that use cellular network technology, including the 3G and 4G standards. Rogers said that the court's decision in the patent case with Broadcom has no relationship to the agreement with Nokia.