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Intel sues Broadcom
August 30, 2000: 9:00 p.m. ET

Charges communications chipmaker Broadcom infringed on patents
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NEW YORK (CNNfn) - Leading chipmaker Intel Corp. filed a patent infringement lawsuit Wednesday against Broadcom Corp., a chipmaker focused on broadband communications.

The Goliath vs. David suit alleges violations in "nearly every aspect" of Broadcom's business, which is focused on making chips that go in cable boxes, cable modems, and equipment for home networking and high-speed business enterprise systems.

graphic"As part of this effort, Broadcom focused on acquiring Intel technology by inducing Intel employees to disclose Intel trade secrets to Broadcom," Intel said in the lawsuit that was filed in U.S. District Court in Delaware. "Broadcom's highest management ... misappropriated Intel trade secrets under the pretense of 'employment interviews.'"

Officials from Intel were unavailable for immediate comment Wednesday evening. A spokesman from Broadcom said company officials had yet to see the suit, but that they confident any charges were groundless.

"We are confident in our business practices," said Bill Blanning, spokesman for the Irvine, Calif.-based company. "The first we heard of this is from the media. Intel made no effort that we're aware of us to alert us of the action or to seek to resolve any problems they had with our operations."

Jonathan Joseph, a semiconductor analyst with Salomon Smith Barney, downplayed the suit and said it would be difficult for Intel to prove. Joseph told CNNfn that Intel is losing engineers to Broadcom, and is "sore" about it.

He added that Intel has acquired other companies for their engineers, to create products of the future, and it is frustrated at the leaking brainpower as Broadcom lures staff away with attractive stock option packages.

But Intel's suit says that it has already won a decision against Broadcom on the state court level in California earlier this year.

graphic"As a result of the Superior Court's findings and order, Broadcom is now subject to a court-appointed, independent monitor to ensure that Broadcom complies with the Superior Court's order that it not misappropriate Intel's trade secrets," says Intel's federal suit filed Wednesday. "Unfortunately, Broadcom's refusal to respect Intel's intellectual property continues. Apparently intent on using Intel technology to build its business, Broadcom is infringing several Intel patents."

The suit seeks unspecified monetary damages and a federal injunction against Broadcom.

Broadcom has been growing rapidly, often through acquisitions. One of the companies it recently bought, home networking provider Epigram Inc., entered into an agreement with Intel after that deal was announced to have Intel support its technology for second generation home phone line networking products.

Broadcom had 1999 sales of just over $500 million, compared with Intel's revenue of $29.4 billion.

Shares of Broadcom (BRCM: Research, Estimates) were down $3.69 to $234.75 in after-hours trading, after losing $13.50 in regular hours activity. Shares of Intel (INTC: Research, Estimates), a component of the Dow Jones industrial average, gained 13 cents in after-hours trading after a loss of 56 cents to $73.50 in regular-hours activity. Back to top


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