May 25, 2007
Qualcomm awaits sanctions in infringement case
By Paul M. Krawzak
COPLEY NEWS SERVICE
WASHINGTON – A ruling a federal agency is
expected to deliver today could strike a serious economic
blow to Qualcomm and the wireless industry if it bans the
import of certain advanced cell phones into the United
International Trade Commission has a deadline of today to
announce its remedy in a patent-infringement dispute
between Southern California chip makers Qualcomm of San
Diego and Broadcom of Irvine.
The commission, an independent federal agency, ruled
last year that Qualcomm infringed on a patent held by
rival Broadcom for a chip that conserves battery power in
high-bandwidth cell phones that can surf the Internet,
play music and download video.
Broadcom has asked the commission to ban the import of
all cell phones containing the infringing chips, an action
it says is necessary to protect its intellectual-property
Qualcomm and more than half a dozen companies in the
wireless industry, including Verizon and Sprint Nextel,
oppose a full ban.
During a two-day hearing before the commission in
March, opponents said stopping those cell phone imports
would cost the industry billions of dollars, raise cell
phone prices and undermine public safety.
Broadcom officials say the dire predictions of harm to
the industry are overblown.
“We certainly don't think it's going to have a great
impact,” said David Rosmann, a Broadcom attorney.
The ITC considers the public interest in making its
decision on a remedy for patent infringement.
Many observers, including former ITC attorney Lyle
Vander Schaaf, doubt the commission will opt for a ban on
cell phone imports because of the effect it would have on
It would be “extraordinary” if the commission did so,
he said. Such a move would “impact these cell phone
manufacturers. It (would) affect the market value of their
stock and everything else because it's going to have an
impact on their sales.”
Not everyone agrees.
Smith R. Brittingham IV, another former attorney for
the commission, said he expects the commission to ban cell
phone imports, based on its actions in previous similar
Other commission options include restricting the import
of some cell phones but not others or simply banning the
import of stand-alone chips. Both sides agree that banning
stand-alone chips would have little effect since most
chips come into the country as part of assembled phones.
In a filing with the ITC, AT&T and Deutsche Telekom's
T-Mobile urged the trade commission to avoid a
“compromise” decision that would ban phones using wideband
CDMA technology and Qualcomm's infringing chips. That
alternative would hurt those companies because they use
the wideband CDMA while their rivals are using competing
Whichever remedy the commission chooses, it could be
overturned by President Bush, who has 60 days to review
the decision. Bush also could ask the commission to modify
Banning the import of phones would hurt Qualcomm sales.
Qualcomm attorney Louis Lupin said the company does not
have an estimate of the sales that would be lost, but that
“it would certainly be significant.”
About 40 million Qualcomm-based phones, representing
$10 billion in sales, will be sold this year in the United
States, estimates Jerry Hausman, an economics professor
from the Massachusetts Institute of Technology.
Even if the commission goes along with Broadcom's
request for a ban on imported cell phones, Americans would
still be able to buy wireless devices with similar
capabilities including devices with typewriter-like
keyboards manufactured by BlackBerry and “smart phones.”
contributed to this report.