On Friday, the U.S. District Court for the Central District of California ruled against Emulex (NYSE:ELX), forcing it to stop producing or importing products that infringe two Broadcom (NASDAQ:BRCM) patents.
Even though the chip maker won the permanent injunction against rival Emulex, the company will still be able to sell some products with Broadcom patents for a limited time due to a “sunset” period ending in 2013. Emulex can continue with sales to customers who placed orders by a specific date. However, Emulex will pay Broadcom a royalty of 9 percent on all sales.
Emulex announced that it will be redesigning the products that represent about 5 percent of its second quarter net revenue. Emulex will take charge of roughly $600,000 for damages to Broadcom against its third-quarter fiscal 2012 results.
Broadcom shares rose 87 cents to $38.68 in morning trade on Nasdaq. Emulex shares were up 6 cents at $10.34 on the New York Stock Exchange.
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