'Soft Modem' Patent Dispute Settled

By Michael Singer

December 17, 2003

Settlement between Broadcom and PCTEL could help hardware vendors solidify their embedded systems choices and PCTEL sell more WLAN software.

Wireless component manufacturer PCTEL has settled one of a handful of patent infringement lawsuits pertaining to its "soft modems" and other voice band modem technology.

The Chicago-based company said chipmaker Broadcom has agreed to payout a lump sum of $3.5 million for past damages and for the two patents relating to Ethernet technology.

The case stems from claims PCTEL filed this March against 3Com , which previously owned part of U.S. Robotics. PCTEL then turned around in May and sued Agere Systems , Lucent Technologies , U.S. Robotics, and Broadcom. At the time, PCTEL claimed the competition was using its copyrighted technology pertaining to V.90 (56 KBPS) modems. The other three cases are still pending. According to published reports, PCTEL could recoup about $400 million from the combined suits.

The settlement is significant to the Wi-Fi community in that it may help hardware vendors solidify their embedded systems choices. Unlike external modems, soft modem requires software to operate. Usually these modems do not have their own processor, requiring the processing power of the CPU. As a result, soft modems use more computer resources than hard modems, but they are less expensive. The deal is also significant for Irvine, Calif.-based Broadcom, which continues to stave off competition from the likes of Agere, Texas Instruments and Intel .

"We are pleased to have this matter behind us," Broadcom vice president Jeff Thermond said in a statement. "This should resolve all current and potential disputes regarding PCTEL's patent portfolio and allow us to focus on the operations of our business and its future. In the process, we are adding significantly to our growing portfolio of communications patents."

Broadcom said it will also receive a license to all of PCTEL's modem patents, including those related to V.92 technology, and other patent applications PCTEL recently acquired from Conexant Systems , as well as a promise not to sue under PCTEL's remaining patents.

Broadcom said it will pay PCTEL patent royalties for sales after 2004. In return, PCTEL said it will dismiss its patent infringement lawsuit and will receive a license to Broadcom's voice band modem patents.

This is not the first time that PCTEL has enforced its fundamental modem patents through litigation. In late 2001, the United States International Trade Commission (ITC) validated several of those patents in an infringement dispute with two other parties. As a result of that litigation, a handful of companies took a license under PCTEL's modem patents.

But PCTEL has methodically shifted away from modem production focusing instead on wireless products. In particular, the company is now specializing in Wi-Fi and cellular mobility software, software-defined radio products and access technology. PCTEL said its WLAN software products (Segue product line) help simplify installation, roaming, Internet access and billing.

PCTEL said Broadcom has also agreed to become one of its Segue Roaming Client customers and will ultimately purchase Segue software sometime in 2004.

"We are delighted to have Broadcom as both a licensee and a customer; we look forward to the opportunity to provide value-added Wi-Fi software to them," PCTEL Vice President of Business Development and Licensing Jeff Miller said in a statement. This settlement also simplifies our litigation strategy and permits us to focus on parties with significant past and future liability."

Despite the loss of two of its patents to Broadcom, PCTEL still maintains more than 115 official papers and patent applications. In addition to its modem patents, the company has patents or applications related to DSL modems and wireless networking.



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