San Diego Union Tribune

March 22, 2007

Battle over patent

Broadcom, Qualcomm argue over 'smartphone' chips, ban on imports

COPLEY NEWS SERVICE

WASHINGTON – Qualcomm and Broadcom executives squared off yesterday in front of the U.S. International Trade Commission over Broadcom's push for a ban on the import of cell phones that contain certain Qualcomm chips.


 
MICHAEL TEMCHINE
Qualcomm Chairman Irwin Jacobs (center) and Broadcom CEO Scott McGregor (right) gave opposing testimony before the International Trade Commission on whether to ban imports of some cell phones with Qualcomm chips.

A commission judge ruled last year that one of Qualcomm's chips put into cell phones infringes on a Broadcom patent. One question before the commission is whether the remedy should be an outright ban on importing phones with the offending chips.

In addition to coming up with a remedy for Broadcom, the ITC, a federal agency, must consider the impact its decision would have on the public interest.

“I am sure there will be presentations today and tomorrow implying that Judgment Day will be upon us” if the phones are banned, Broadcom Chief Executive Scott McGregor told commissioners during the first day of the two-day hearing.

The dispute centers around a Qualcomm chip inside the phones that can be used to connect to the Internet, listen to music and play video. The chip made by the San Diego-based company preserves a phone's battery power when it is taken outside of its network.

Overview

Background: Rival chip maker Broadcom successfully argued to the ITC that some of Qualcomm's chips infringed on one of its patents.

What's changing: The International Trade Commission wraps up a two-day hearing today in Washington on whether it should ban the importation of some cell phones that use Qualcomm chips. Testifying today are representatives of wireless carriers and cell phone makers that could have some of their phone imports banned, as well as public safety officials.

The future: The ITC has said it will make a decision by May 8.

McGregor and other experts testifying for Irvine-based Broadcom insisted plenty of alternatives are available for consumers who want phones that perform similar functions, including a growing line of so-called “smartphones.”

The two Southern California companies at odds over this chip are also opponents in other cases pending in Orange County federal court and in front of European antitrust regulators.

The last time the ITC held a public hearing to consider a remedy for a patent infringement case was in 1993. Government and industry officials said the commissioners wanted to hear the arguments in person rather than depending on written briefs because of the wide impact their ruling could have on the fast-evolving wireless industry.

Current owners of phones containing the chips would not be affected by a ban. But it would prevent such phones from being shipped into the United States in the future.

Broadcom insists that a ban is necessary to protect its intellectual property rights.

Qualcomm executives argued a full ban is too severe and would reduce competition, damage the U.S. chip industry and compromise public safety.

“We are strong believers in intellectual property,” Qualcomm Chairman Irwin Jacobs told the commission yesterday.

But Jacobs said the ban would “have a major impact on a very significant part of our business and the cellular business in general.”

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Qualcomm also argues a ban would result in fewer choices and increased costs for consumers and have an adverse effect on emergency workers, such as police and firefighters, who depend on the cell phones.

Broadcom officials disputed this and showed commissioners a copy of an advertisement depicting three phones that have similar capabilities – and two of them were phones that would not be affected by a ban.

Broadcom's McGregor said some smartphones available now were not on the market when Commission Administrative Law Judge Charles E. Bullock ruled against Qualcomm last October. Bullock has recommended against a full ban on imported phones.

An attorney for the commission weighed in on Broadcom's side, arguing that the ban is necessary. Karin J. Norton said allowing manufacturers of the phones “to continue to benefit from what has already been determined to be an unfair trade practice will provide them with a competitive advantage over those who conduct business lawfully through the negotiation of licenses to necessary intellectual property.”

Qualcomm officials said alternatives that are available have a full typewriterlike keyboard, which they said may not be what consumers want. Some alternatives also are larger than cell phones, they said.

Witnesses for Broadcom denied the ban would have any effect on public safety. “It will be nil,” said Roger A. Van Nest, an attorney for Broadcom.

Frances Edwards, an associate professor of political science at San Jose State University who has a background in emergency response, said first responders depend on radio equipment rather than cellular communications.

Qualcomm witnesses agreed that radios will remain the main communication tool for first responders for some time, but they said advancing cellular technology provides an increasingly valuable supplement.

“There is extensive use of cell phones throughout the entire first responder community,” said Joseph L. Hanna, an emergency services expert testifying for Qualcomm.

The hearing continues today with more testimony from emergency services personnel as well as from cell phone makers that use the Qualcomm chips.

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