The Caltech Apple lawsuit ended in a confidential settlement in the fall of 2023, more than seven years after the California Institute of Technology sued Apple and Broadcom over Wi-Fi chip patents. A jury had awarded Caltech roughly $1.1 billion in January 2020, but the Federal Circuit vacated the damages in 2022 and ordered a new trial. The parties settled before that retrial could take place, and the case was dismissed with prejudice on November 22, 2023.1
What Caltech Accused Apple and Broadcom Of
Caltech filed suit on May 26, 2016, in the U.S. District Court for the Central District of California, before Judge George H. Wu. The complaint accused Broadcom of making Wi-Fi chips that infringed Caltech patents on a data-encoding method known as irregular repeat and accumulate codes, a form of low-density parity-check coding. Apple was named because its iPhones, iPads, and Mac computers used those Broadcom chips.
Three patents went to trial: U.S. Patent Nos. 7,116,710, 7,421,032, and 7,916,781. The technology had been adopted into the IEEE 802.11n, 802.11ac, and 802.11ax Wi-Fi standards, better known as Wi-Fi 4, 5, and 6. Because Caltech developed the coding methods independently of the IEEE standards-setting process, it was under no obligation to license them on fair, reasonable, and non-discriminatory terms. That freedom mattered later when damages were calculated.
Apple tried to knock out the patents before trial. In 2016 it filed eight petitions for inter partes review at the Patent Trial and Appeal Board, naming Broadcom as a real party in interest. The PTAB instituted review on seven of the eight and ruled in 2018 that Apple had not shown the challenged claims were unpatentable. That loss came back to haunt the defendants: when they later tried to raise fresh invalidity arguments in district court, Judge Wu barred them under the IPR estoppel statute, 35 U.S.C. § 315(e)(2).
The $1.1 Billion Jury Verdict
Trial began in January 2020. The jury found that two encoder components inside Broadcom’s Wi-Fi chips, called the Richardson-Urbanke encoder and the low-area encoder, infringed all three asserted patents. Apple was found to infringe as well because its devices contained the chips.
On January 29, 2020, the jury returned a verdict of $1,108,042,349, split as $270,241,171 against Broadcom and $837,801,178 against Apple. After Judge Wu added pre-judgment interest and an ongoing royalty at the jury’s rate, final judgment came to $288,246,156 against Broadcom and $885,441,828 against Apple.
Caltech’s damages experts had used what they called a “two-tier” theory. They asked the jury to imagine two separate hypothetical licensing negotiations happening at the same time: one with Broadcom at the chip level, producing a royalty of $0.26 per unit, and another with Apple at the device level, producing $1.40 per unit. To avoid counting the same chip twice, the experts left Apple-bound chips out of Broadcom’s royalty base. The district court let the theory go to the jury while noting reservations about it.
Why the Federal Circuit Threw Out the Damages
Apple and Broadcom appealed. On February 4, 2022, the U.S. Court of Appeals for the Federal Circuit issued a split ruling. It preserved much of Caltech’s infringement case but wiped out the damages entirely.
On the ‘710 and ‘032 patents, the court affirmed infringement, upholding the district court’s construction of the disputed claim term “repeat” and its refusal to grant judgment as a matter of law. It also affirmed that claim 13 of the ‘781 patent was patent-eligible under 35 U.S.C. § 101, and it upheld the estoppel and inequitable-conduct rulings from the pre-trial phase. But the jury’s infringement finding on the ‘781 patent was vacated because the district court had not instructed the jury on the meaning of another contested claim term, “variable number of subsets.” That issue was sent back for a new trial.
The damages award drew sharper language. The Federal Circuit called Caltech’s two-tier royalty theory “legally unsupportable,” saying there was no evidence Apple and Broadcom would have negotiated two separate licenses at two different rates rather than a single license covering the infringing chips. Excluding Apple-bound chips from Broadcom’s royalty base, the court said, was “wholly contrived” and had no factual basis. Both damages awards were vacated and remanded for a new trial.
Supreme Court Denial and the Road Back Toward Trial
Apple asked the U.S. Supreme Court to review the estoppel portion of the ruling, arguing in petition No. 22-203 that the Federal Circuit had “dramatically overexpanded” the IPR estoppel provision. The Court invited the Solicitor General’s views in January 2023, and the Solicitor General filed a brief on May 23, 2023. On June 26, 2023, the Court declined to hear the case.
Meanwhile, the district court was preparing for a damages retrial. Apple and Broadcom moved in late 2022 to reopen discovery, pointing to a separate Caltech suit against Microsoft. Judge Wu denied the motion, finding the defendants had not been diligent about investigating sublicenses before the original trial. A retrial was set for June 2023, but in May the judge paused the proceedings to work through newly raised questions about Caltech’s standing.
The 2023 Settlement
A court filing on August 10, 2023, disclosed that the parties had reached a “potential settlement.” The agreement was finalized by September 22, 2023. On October 12, 2023, Caltech and Broadcom asked the court to dismiss the case, and on November 22, 2023, Judge Wu granted the parties’ stipulation to dismiss all claims with prejudice, meaning the case cannot be refiled.
The financial terms have not been made public. Because the original $1.1 billion verdict had already been vacated, the settlement figure would have been negotiated against the backdrop of a fresh damages trial rather than the jury’s number.
What the Case Changed
Two pieces of the ruling outlast the settlement.
The first is the reach of IPR estoppel. The Federal Circuit held that a party who files an inter partes review is barred in later district court litigation from raising any invalidity ground it reasonably could have included in the petition, even grounds it never actually raised. In doing so, the court overruled its earlier decision in Shaw Industries Group, Inc. v. Automated Creel Systems, Inc., which had read the estoppel statute more narrowly. The Supreme Court’s refusal to take up Apple’s petition left that broader rule in place.
The second is the treatment of two-tier royalty theories. By calling Caltech’s approach “legally unsupportable” and requiring a “compelling showing” before different royalty rates can be applied to the same chip at the component and device levels, the Federal Circuit set a benchmark that patent damages experts have had to work around in later cases involving component suppliers and the customers who build their parts into finished products.