Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_05-cv-01958/USCOURTS-casd-3_05-cv-01958-0/pdf.json

Nature of Suit Code: 830
Nature of Suit: Patent
Cause of Action: 35:271 Patent Infringement

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28 1 05-CV-1958-B (BLM)

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

QUALCOMM INCORPORATED,

Plaintiff,

v.

BROADCOM CORPORATION,

Defendants.

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Civil No: 05-CV-1958-B(BLM)

ORDER GRANTING BROADCOM

CORPORATION’S REQUEST

FOR RECONSIDERATION BY

DISTRICT COURT OF

MAGISTRATE JUDGE’S RULING

CONCERNING PRODUCTS IN

DEVELOPMENT

I. INTRODUCTION

Before the Court is Defendant Broadcom Corporation’s (“Broadcom”) Request for

Reconsideration of Magistrate Judge’s Ruling Concerning Products in Development filed

on October 27, 2006. Doc. No. 146. On November 3, 2006, the Court held a hearing on

Broadcom’s Request. Having reviewed the papers and oral arguments in favor and

opposition thereto, the Court hereby GRANTS Broadcom’s Request for Reconsideration.

On October 24, 2006, the Magistrate Judge granted Plaintiff Qualcomm

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 The full text of 35 U.S.C. § 271(a) (2001 & Supp. 2006) reads as follows: “Except as

otherwise provided in this title, whoever without authority makes, uses, offers to sell, or sells any

patented invention, within the United States or imports into the United States any patented invention

during the term of the patent therefor, infringes the patent.”

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Incorporated’s (“Qualcomm”) motion to compel discovery of Broadcom’s fabricated and

Field-Programmable Gate Array (“FPGA”) prototype H.264 products (“October 24

Order”). Doc. No. 144. The main issue before this Court is whether Broadcom’s

development of the products at issue constitute “making” under 35 U.S.C. § 271(a)1

 and

therefore is discoverable in this lawsuit. Parasitic to this main issue are the specific

discovery and sanction rulings made by the Magistrate Judge in the October 24 Order. The

Court finds that Broadcom’s development of the products at issue here did not constitute

“making” under 35 U.S.C. § 271(a) and is therefore not discoverable.

The Court accordingly REVERSES the Magistrate Judge’s October 24 Order

granting Qualcomm’s motion to compel discovery of Broadcom’s fabricated and FPGA

prototype H.264 products and ordering Broadcom to pay all associated costs including

Qualcomm’s reasonable attorneys’ fees. The Court REMANDS any outstanding or future

discovery issues to be resolved by the Magistrate Judge in accordance with this Order.

II. BACKGROUND

Qualcomm filed the present suit against Broadcom for patent infringement on

October 14, 2005. Doc. No. 1. On October 24, 2006, the Magistrate Judge granted

Qualcomm’s motion to compel discovery of Broadcom’s fabricated and FPGA prototype

H.264 products. October 24 Order. In this order, the Magistrate Judge granted

Qualcomm's request to take the deposition of a Broadcom witness competent to provide

testimony regarding Broadcom's fabricated and prototyped H.264 products. See id. at 16. 

The Magistrate Judge required that the deposition occur on or before November 6, 2006,

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and ordered Broadcom to pay all costs associated with the deposition, including

Qualcomm’s reasonable attorneys’ fees. See id. at 17. The Magistrate Judge further

granted Qualcomm’s request that Broadcom supplement its responses to certain Qualcomm

Requests for Production and Interrogatories within seven (7) days of the October 24 Order. 

See id.

On October 27, 2006, Broadcom filed an ex parte application for stay of the October

24 Order pending reconsideration by the District Court. Doc. No. 147. Broadcom

simultaneously filed the present Request for Reconsideration by District Court of

Magistrate Judge’s Ruling Concerning Products in Development. Doc. No. 146. On

November 2, 2006, this Court granted Broadcom’s ex parte application for stay of the

October 24 Order pending resolution of Broadcom’s present request for reconsideration. 

Doc. No. 150.

As set forth in the October 24 Order, Qualcomm is seeking to compel oral and

written discovery regarding Broadcom’s fabricated and prototyped H.264 products, or

products in development. See October 24 Order, p. 4. As defined by Qualcomm,

fabricated products are those products that have been fabricated, but for which a final

version has yet to be distributed, i.e., sampled, to customers and potential customers. See

id. at 4 n. 2. Qualcomm defines prototyped products as products that have yet to be

produced in marketable form, but of which prototypes of video encoding components have

been created using an FPGA emulation device. See id. 

Broadcom has already conceded to providing discovery for products that have been

or will be fully designed and sent to the factory for physical fabrication (i.e., “taped out”)

by the time the trial is set to begin on January 9, 2007. See id. at 4 - 5. Broadcom opposes

Qualcomm’s motion to compel, arguing that the products at issue have not been nor will

they be taped out until at least February or March 2007. See id. at 5. Therefore, Broadcom

argues that these products have not been “made” for purposes of 35 U.S.C. § 271(a) and are

not subject to discovery. See id.

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III. DISCUSSION

From the facts set out in the record of the present action, the Court finds that

Broadcom’s development of fabricated and FPGA prototyped H.264 products does not

constitute “making” under 35 U.S.C. § 271(a). As described to the Court by both parties

during the November 3, 2006, hearing regarding the present Request for Reconsideration,

before a chipset is taped out, a prototype is designed in the laboratory and subjected to

testing in an FPGA, a programmable device in which all logic gates and other points of

adjustment appropriate for the chipset can be set on a temporary basis for testing purposes. 

After testing is complete and the prototype functions as the designer intended it to, the

prototype is taped out, creating a blueprint from which the manufacturer can produce the

final chip. Taping out is the final step before chipset production. 

Accordingly, the Court finds that taping out is the last event that occurs outside the

scope of patent infringement liability under the term “making” in 35 U.S.C. § 271(a). The

moment this tape out is transferred to a manufacturer for the purpose of chipset production

is the first step of “making.” Broadcom’s H.264 products at issue here apparently have not

been taped out yet and will not be before the trial for the present action is set to begin on

January 9, 2007. Broadcom estimates that they will be taped out at the earliest in February

or March 2007. See October 24 Order, p. 5. No evidence of a transfer date for the tape out

was provided. Therefore, they have not been “made” under § 271(a) and do not infringe

the Qualcomm patents at issue here. As such, the Court finds that they are beyond the

scope of discovery in this case.

Qualcomm argues that Broadcom’s H.264 products at issue do not fall under the

“experimental use” exception to patent infringement liability as laid out by the Federal

Circuit. In Madey v. Duke Univ., 307 F.3d 1351, 1352 (9th Cir. 2002), former Duke

University (“Duke”) professor Madey had sole ownership of two patents practiced by some

of the equipment in his laboratory at Duke. Duke removed him as director of that

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laboratory, but continued to operate some of the equipment there, so Madey sued the

University for patent infringement. See id. at 1352 - 53. The Federal Circuit held that

Duke’s use of the equipment did not fall under the experimental use exception, since

“regardless of whether a particular institution or entity is engaged in an endeavor for

commercial gain, so long as the act is in furtherance of the alleged infringer’s legitimate

business and is not solely for amusement, to satisfy idle curiosity, or for strictly

philosophical inquiry, the act does not qualify for the very narrow and strictly limited

experimental use defense.” Id. at 1362. 

However, this Court does not grant Broadcom’s request for reconsideration under

the “experimental use” exception to patent infringement, but rather on the grounds that

development of the H.264 products in question does not constitute “making” under 35

U.S.C. § 271(a) and therefore does not constitute patent infringement. Furthermore, in this

case, Broadcom designed prototypes to emulate chip behavior in the testing phase of

product development, as any responsible company would do to 1) investigate efficacy and

2) ensure that it is not infringing on existing patents. Unlike Duke in Madey, which used

Madey’s equipment for its intended laboratory purposes, Broadcom was not using the

FPGA prototypes for any actual commercial applications protected by Qualcomm patents. 

Instead, it was acting as a reasonable company by testing prototypes in order to design a

successful next generation chipset that did not infringe on existing patents. Therefore, the

Federal Circuit’s reasoning in Madey would not apply here.

Qualcomm further argues that a prototype of a device that has not been taped out

can constitute “making” under 35 U.S.C. § 271(a) and infringe a patent if it meets the

limitations of the asserted patent claims, but does not refer to any persuasive binding

precedent in support of its claim. Ironically, Qualcomm took the opposite stance in the

related International Trade Commission (“ITC”) proceeding, Inv. No. 337-TA-543,

between Qualcomm and Broadcom. On November 28, 2005, Broadcom moved to compel

production of documents related to Qualcomm’s products in said ITC proceeding. 

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 The “earlier stage of development” in that case was not defined, except to say that the chip

involved “has not been shown to customers.” Certain Optical Disk Controller Chips, Inv. No. 337-

TA-523, Order 46, *11 (May 2005).

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Qualcomm opposed this motion, arguing that the chipsets in question (which, incidentally,

had already been taped out) were “not commercially available or even available for

sample.” Doc. No. 155, Ex. 6, p. 5. As support, Qualcomm cited to Certain Optical Disk

Controller Chips, Inv. No. 337-TA-523, Order 46 (May 2005), in which the Administrative

Law Judge (“ALJ”) held that products in the “earlier stage of development” may not

properly fall within the scope of discovery.2

 Id. at *11. Qualcomm there contended that

“[w]here, as here, the product has not been shown to customers, it is not appropriate to

include the product within the bounds of discoverable material.” Doc. No. 155, Ex. 6, p. 5.

In the ITC Proceeding, the ALJ held that “the relevant question is not whether [the

Qualcomm chipsets in question] are going to be imported into the United States before the

completion of this investigation, but whether the chipsets are in a sufficiently finalized state

of development such that information regarding them would lead to the discovery of

admissible information.” Doc. No. 155, Ex. 9, p. 5. In the December 20, 2005, Order, the

ALJ noted that “engineering samples of [the Qualcomm chipsets in question] will not be

available until March 2006 and December 2006, respectively, and that the commercial

availability of [the Qualcomm chipsets in question] are estimated to be available in

December 2006 and December 2007, respectively.” Doc. No. 155, Ex. 11, p. 1. The ALJ

therefore held that the Qualcomm chipsets were “not in a sufficiently finalized state of

development such that information regarding them would lead to the discovery of

admissible information in this investigation” and denied Broadcom’s motion to compel. Id.

at 1 - 2. Broadcom seeks, and the Court finds, development to cease and “making” to start

before chipsets are available for sample, if that, as the Court understands, is an event that

occurs after tape out. 

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The Magistrate Judge did not have access to the unredacted copies of the parties’

briefs and the ALJ’s Orders in said ITC proceeding. Qualcomm was therefore able to

convince the Magistrate Judge that the basis for the ITC’s denial of Broadcom’s motion to

compel was the products’ “importability” rather than their developmental status. See

October 24 Order, p. 12. However, as cited above, the ALJ’s analysis of the developmental

status of the Qualcomm products in question had a building block significance to any

following analysis of “importability.” Doc. No. 155, Exs. 9, 11. This Court finds

persuasive the reasoning used by the ALJ in the ITC matter in denying Qualcomm’s

present motion to compel discovery related to products in development, a position directly

advocated by Qualcomm itself in the ITC proceeding, and the facts of this case are a

fortiori to Qualcomm’s position before the ITC.

IV. CONCLUSION

Accordingly, the Court finds that taping out a chipset is the last event that occurs

outside the scope of “making” under 35 U.S.C. § 271(a). The moment this tape out is

transferred to a manufacturer for the purpose of chipset production is the first step of

“making” under § 271(a) and the first exposure to patent infringement liability under this

term. Discovery regarding products under the term “making” shall not be allowed until this

tape out transfer occurs.

The Court therefore GRANTS Broadcom’s present Request for Reconsideration of

Magistrate Judge’s Ruling Concerning Products in Development. The Court REVERSES

the Magistrate Judge’s October 24 Order granting Qualcomm’s motion to compel discovery

of Broadcom’s pre-tape-out fabricated and FPGA prototype H.264 products and ordering

Broadcom to pay all associated costs including Qualcomm’s reasonable attorneys’ fees. 

The Court further REMANDS any outstanding or future discovery issues to be resolved by

the Magistrate Judge if necessitated by this Order.

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IT IS SO ORDERED

DATED: November 20, 2006

Hon. Rudi M. Brewster

United States Senior District Court Judge

cc: Hon. Barbara Lynn Major

 United States Magistrate Judge

 All Counsel of Record

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