Dec. 1 (Bloomberg) -- Qualcomm Inc. can’t enforce patents for technology to transmit DVD-quality video over satellites, wireless devices and the Internet, an appeals court ruled.

The Washington-based court today upheld a finding that Qualcomm, the world’s largest maker of chips that run mobile phones, couldn’t enforce its patents against Broadcom Corp. because it never told a standards-setting body about them. The court said the decision was limited to products that comply with the standard.

The lower court was correct to find that “Qualcomm intentionally organized a plan to shield its patents from consideration” by the standard-setting group, a three-judge panel of the court ruled.

Today’s decision by the U.S. Court of Appeals for the Federal Circuit, which handles most patent cases, establishes new rules on companies’ compliance with requirements of groups that set standards for things like components of computer electronics.

Qualcomm lost a trial in which it accused Broadcom of infringing two patents related to an industry standard to compress high-definition video. Qualcomm, based in San Diego, didn’t appeal the jury’s verdict that its patents weren’t infringed.

The appeal centered on whether U.S. District Judge Rudi Brewster wrongly ruled Qualcomm deserved to be prevented from blocking the use of its inventions or seeking royalties from anyone.

Unenforceable Patents

Typically, a patent can be deemed unenforceable after a finding that the inventor misled the U.S. Patent and Trademark Office to obtain it. In the Qualcomm ruling, Brewster said the company’s concealing the patents from the standards board was a similar fraud.

“A district court may in appropriate circumstances order patents unenforceable as a result of silence” before standard bodies “as long as the scope of the district court’s unenforceability remedy is properly limited in relation to the underlying breach,” the Federal Circuit ruled.

Broadcom claimed that Qualcomm first hid the patents from the standards-setting board, then denied to Broadcom that it had even participated on the board until questioned during the January 2007 trial.

Later, Broadcom, based in Irvine, California, discovered that Qualcomm withheld thousands of documents related to the patents and Qualcomm’s participation in the standards-setting board.

More Violations Claimed

“Qualcomm’s standards abuse in this case is just the tip of the iceberg,” David Rosmann, Broadcom’s vice president for intellectual property litigation, said in an e-mailed statement. “We believe Qualcomm has violated the rules of the cellular standards bodies as well, a fact we are determined to bring to light in our other pending cases.”

Qualcomm confirmed the ruling in an e-mailed statement.

Qualcomm fell $3.61, or 10.8 percent, to $29.96 in Nasdaq Stock Market trading. Broadcom fell $1.19, or 7.8 percent, to $14.12.

The case is Qualcomm v. Broadcom, 2007-1545, U.S. Court of Appeals for the Federal Circuit (Washington). The lower court case is Qualcomm Inc. v. Broadcom Corp., 05cv1958, U.S. District Court, Southern District of California (San Diego).

To contact the reporters on this story: Susan Decker in Washington at sdecker1@bloomberg.net; William McQuillen in Washington at bmcquillen@bloomberg.net.

Last Updated: December 1, 2008 16:23 EST