QCOM: BRCM and NOK Fights Drag On

Implications: Recent news in both the BRCM and NOK fights confirm what many of us have been saying for a while now: these litigations are nowhere near over, and QCOM has a long road to travel before it will finally clear these issues and emerge with a (very) healthy forward-looking business.

Analysis: Litigation between BRCM and QCOM, and between NOK and QCOM, has grabbed headline after headline for years now.  QCOM wins one.  QCOM loses one.  Another one goes up on appeal.  The process seems to never end, and everyone who watches QCOM is a little tired of talking about the law rather than talking about the products.

But is the end in sight?  In my view, no.

The BRCM litigation is probably the closest to being done, but even there it would be surprising were things to settle before at least 10 more months pass.  QCOM recently lost a big patent dispute in Santa Ana, and part of that loss has immediate implications for the firm's WCDMA business.  But most of the implications of the loss are delayed until January of next year; and, even though the judge has refused to delay the rest, it is likely that the Federal Circuit will. 

Will QCOM ultimately have to settle this dispute and make peace with BRCM?  Yes.  But so long as the implications are 12 months off, and so long as there is a good chance of a stay from the Federal Circuit, my guess is that QCOM will keep fighting the merits, keep working on ways to "work around" the patents, and hold off on any cross-cutting deal with BRCM.

The NOK litigation, by contrast, is set to last.  Yes, the Delaware court has jump-started its investigation of the contractual issues, and indeed it looks likely that the Delaware case will move quickly (8 months?) toward a final resolution.  But the contract issues being heard in Delaware are only a small part of the bigger fight, and the likely outcome in Delaware will be a set of decisions that then sets the stage for a new, final round of fights: namely, patent cases in the US and abroad.  Put differently, the issues that will be decided in DEL are not game-over issues; they are important, yes, but they are not likely to be decisions that (say) establish a royalty or determine whether NOK is infringing.

None of this is to imply that the recent news is unimportant.  Getting Delaware moving is great for QCOM as it will clear away some of the legal weeds and allow the parties to finally focus on the core fights.  Similarly, the Santa Ana injunction is bad for QCOM and its implications do loom.  But for anyone expecting broad settlement in the near-term, disappointment is likely in store.   BRCM is about a year away from its final laps, and NOK is just getting started.