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Broadcom fires back after Intel sues

Broadcom chief executive Henry Nicholas blasts Intel, saying the chip rival is using a patent-infringement lawsuit against his company to try to slow competition.

Broadcom chief executive Henry Nicholas today blasted Intel, saying the chip rival is using a patent-infringement lawsuit against his company to try to slow competition.

Intel sued Broadcom last week, claiming that the maker of communications chips infringed on five Intel patents. An Intel representative confirmed that Intel did not try to negotiate with Broadcom over the patent issues before filing the suit. The two have an ongoing trade secrets lawsuit relating to four former Intel workers, three of whom were hired by Broadcom.

"It is regrettable that Intel--a great company, a worthy competitor, an early investor in Broadcom and indeed our business partner today in some areas--would once again resort to specious litigation in the courts rather than competition in the marketplace," Nicholas said in a statement issued today.

In its action, Intel claimed that Broadcom was trying to build its business using Intel's technology, a claim Nicholas rejected. At the time, Broadcom said it had not had a chance to review Intel's claims.

Broadcom said it has now made a preliminary review of the lawsuit.

"Contrary to some outrageous allegations and statements made by Intel, Broadcom firmly believes in the sanctity of intellectual property," Nicholas said. "We work diligently to protect our hard-earned intellectual property, we absolutely respect the intellectual property of others, and we expect others to respect ours."

Intel charges that Broadcom infringes on three patents relating to video compression, one to networking and one to chip packaging.

"Of the five patents asserted by Intel, four are related to areas where Broadcom conforms to widely followed industry standards," Nicholas said. "Three involve the area of video compression and decompression, in which Broadcom's products merely implement the popular and ubiquitous MPEG-2 industry standard."

Broadcom, which outsources its chip packaging, said it believes that a patent related to ball-grid array (BGA) chip packaging is invalid.

"Our BGA-packaged chips are packaged by the largest and most respected independent assembly companies in the world, using the same standard BGA technology that many of the industry's leading companies used for years before Intel applied for its patent," Broadcom said.

The last claim relates to a networking system, and Broadcom said its engineers have not been able to find any product that the patent relates to.

Broadcom shares traded lower Wednesday after the suit was filed, dropping as much as 7 percent. In early trading today, Broadcom was down $5.19, or about 2 percent, at $236.88.

Following a downgrade from U.S. Bancorp Piper Jaffray, Intel shares were trading today down $3.25, or about 4 percent, at $70.69.