July 02, 2004, 7:52 AM — Qualcomm Inc. can't cancel a cell-phone cross-license agreement with Texas Instruments Inc. (TI) even though TI violated a confidentiality pact between the companies, a court in Delaware is set to rule.
TI broke a confidentiality rule by revealing information about the deal, but that wasn't a "material breach" of the deal, meaning one that would justify canceling it, representatives of both companies said Thursday. However, Qualcomm is set to bring TI to trial in August and could collect damages for the breach of confidentiality, they said.
Chancellor William Chandler of the Delaware Court of Chancery told the parties on Wednesday how he would rule in the case but left a detailed explanation of his reasoning for a written ruling to be issued later, said Lou Lupin, senior vice president and general counsel of Qualcomm. The Court of Chancery is a non-jury trial court presided over by one chancellor and four vice chancellors.
Also Wednesday, Chandler said he would issue a summary judgment to Qualcomm in a lawsuit brought by TI, which accused Qualcomm of breaking the cross-license agreement by granting royalty discounts to handset makers that use Qualcomm semiconductors. That suit won't go forward now, the companies said.
Dallas-based TI and San Diego-based Qualcomm, the pioneer of CDMA (Code Division Multiple Access) cellular technology, agreed in December 2000 to cross-license Qualcomm's CDMA patents and TI's DSP (digital signal processor) and analog technology patents. In July 2003, Qualcomm sued TI claiming the company had revealed information about the pact in violation of its terms. In September of that year, TI sued Qualcomm, saying the company gave breaks to cell phone makers that used its own chips. The cases later were combined in the Court of Chancery.
Last year, TI joined with STMicroelectronics NV and Nokia Corp. to offer a chipset for CDMA2000 1X, a CDMA-based high-speed mobile data technology.
The chancellor's decision removes one type of relief Qualcomm might have sought from TI, but the company still aims to make TI pay for revealing confidential information about the deal, Lupin said.
"We believe the injury is considerable, and that's what we'll be attempting to prove in August," he said.
For its part, TI welcomed the chancellor's decision on the "material breach" issue.
"The bottom line is that TI will retain our rights to Qualcomm's CDMA patents," said Gail Chandler, a TI spokeswoman.
The Chancery Court could not immediately be reached for comment.