Components | October 19, 2011

Emulex required to pay $387,922 in patent trial with Broadcom

Emulex reported the completion of the trial in the U.S. District Court for the Central District of California, and the resulting partial verdict determining that Emulex is to pay $387,922 in the patent infringement lawsuit filed against Emulex by Broadcom.
The monetary award of $387,922 was based on U.S. sales by Emulex from the date of filing of the original lawsuit, September 14, 2009, through August 27, 2011. In its annual report Form 10-K for the fiscal year which ended on July 3, 2011, Emulex reported that it had cash, cash equivalents and investments of $183,350,000. The $387,922 award is 0.2 percent of that amount.

Although the trial was completed, only a partial verdict was reached involving two patents out of the six patents included in the trial. A mistrial was declared concerning the remaining four patents for which no unanimous verdict was reached.

The trial primarily focused on serializer/deserializer (SerDes) modules, which Emulex does not design but obtains from several suppliers, such as Applied Micro Circuits, LSI Corporation, Renesas (formerly NEC Electronics) and Toshiba. The Broadcom SerDes patents are not specific to Ethernet or Fibre Channel or any other protocol. The Broadcom lawsuit only involves US patents, not worldwide patents. The SerDes modules contained in Emulex products are commodity designs used in many other products by many other companies.

“Emulex is dedicated to providing support to our customers of highly reliable products, and will work with our suppliers to implement design changes if necessary for the SerDes modules included in Emulex integrated chips,” said Jim McCluney, the Chief Executive Officer of Emulex. “Emulex plans to take appropriate steps to ensure continued product supply and support to our customers.”

Broadcom had earlier asserted 12 different US patents against Emulex. Emulex presented a vigorous defense prior to the trial, and only 6 patents remained by the time of trial. After three weeks of trial, the court determined that one of the patents had been infringed by Emulex, and the jury rendered an advisory verdict to the Court that it is not invalid, and awarded $387,922 in damages with respect to that patent.

The jury reached a unanimous verdict of non-infringement on another patent relating to Emulex Fibre Channel switch products. The jury did not reach a unanimous verdict on infringement concerning the remaining four patents in the trial. Emulex intends to continue to vigorously defend its products, including a potential appeal of the trial verdict.
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