Broadcom Victory Could Cripple Mobile Phone Suppliers

By Spencer D. Chin

TMCnet Web Editor

 

In a decision that could reek havoc with mobile phone suppliers, the International Trade Commission has ruled that Qualcomm (News - Alert) Corp. cannot import some of its baseband chips into the U.S. because they violate patents owned by semiconductor supplier Broadcom Corp. The ban would effectively bar the import of future 3G phones that use Qualcomm’s baseband chips.

 

The ITC order, which covers baseband processor chips that comprise Qualcomm's core suite of enhanced multimedia and convergence handset platforms, would not include phones and data cards already in use in the U.S. But it would ban an emerging generation of 3G phones mobile phone service providers plan to offer, and affect Qualcomm’s ability to support the testing and debugging of handsets.

 

Last year, an ITC administrative law judge and later the Commission itself found that Qualcomm's cellular baseband chips infringe five claims of U.S. Patent No. 6,714,983, which relates generally to power conservation in cellular phones.

 

"We are very pleased with the ITC's ruling, and gratified that the Commissioners followed the letter and spirit of their charter, which is the protection of American products from unfair trade practices," said David A. Dull, Broadcom's (News - Alert) senior vice president and General Counsel. "In this case, Qualcomm and its customers have been importing products that use Broadcom's valuable intellectual property without permission.”

 

Qualcomm said in a released statement it would seek an emergency stay from the Federal Circuit and a Presidential veto of the ITC ruling, on the grounds that the action would harm U.S. consumers, impact public safety, and harm the U.S. economy by stunting mobile broadband deployment.  Qualcomm contends the ruling would punish innocent mobile phone makers and wireless operators that did not have the opportunity to contest Broadcom’ infringement claims.

 

Moreover, Qualcomm stated that the ruling could adversely impact the ability of the company and its partners to develop new phone designs which provide higher performance and accuracy in emergency situations, as in E911 emergency call centers locating wireless subscribers.

 

“We believe that Commission has not afforded manufacturers and operators, who will bear the brunt of this order, an adequate opportunity to defend their interests,” said Paul Jacobs, Qualcomm’s chief executive.

 

A spokesperson for Verizon (News - Alert) Wireless said in an Associated Press report Friday morning that the mobile phone services operator would also seek to have a federal court block the order and urge a White House veto. The report stated that AT&T was also studying the ruling, while Sprint (News - Alert) Nextel declined to say whether it would support Verizon’s appeal.

 

All three companies use Qualcomm’s chip technology in their products.

 

How quickly Qualcomm can find a technical workaround for the cellular baseband patent is questionable. Qualcomm testified at an ITC hearing in March that it could take as long as 18 months to find a workaround for the patent.

 

The ITC order is subject to Presidential review for 60 days. Bill Mandir, an IP partner with Sughrue Mion LLC, Washington, D.C., said in an interview with TMCnet that Qualcomm and other companies opposed to the decision would likely face an uphill battle trying to get the order overturned.

 

“The ITC was set up as a governmental organization that has expertise in these matters,” Mandir said. “There’s an administrative process that the government delegates and expects to be correct.”

 

Mandir added that Qualcomm’s argument the order could impact future U.S. security would constitute the best argument to overturn the decision. “Maybe that will get the Bush Administration’s attention,” he said.

 

The ITC decision is the latest victory for semiconductor supplier Broadcom, which for the last two years has wrestled with Qualcomm over patent claims related to communications chip technology. Broadcom originally filed its ITC complaint in May 2005.

 

On May 29, a federal jury ruled Qualcomm willfully infringed nine claims of three different Broadcom patents. The jury awarded Broadcom $19.64 million in damages, which may be trebled by the judge due to the finding of willful infringement. Broadcom also plans to seek an injunction to bar future infringement by Qualcomm.

 

“As previously stated, we have been forced to seek redress in the ITC and the courts because Qualcomm has repeatedly refused to recognize the value of Broadcom’s patented technology,” said Dull.