Mobile communications is a market that's home to a large number of players, all of which are vying for a top spot, whether it’s in actual handhelds, phones or integrated electronics. This week however, a ruling by the U.S. International Trade Commission (ITC) throws a big wrench at major wireless carriers and handset makers. AT&T uses a different type of 3G network, one that is not limited to chips from Qualcomm and is therefore excluded from ruling. The company however is testing out technology from Qualcomm that works around Broadcom's patents. AT&T representatives indicated that the company is already testing the new technology. AT&T imminent release of Apple's iPhone will not be affected since the iPhone is not a 3G phone.
Mobile phones and carriers heavily affected; Broadcom says its happy
The ITC put forth a ruling this week barring the import of mobile phones using chips from Qualcomm Inc. According to the ITC, Qualcomm's chips used in mobile phones infringe on patents belonging to Broadcom Inc. The chips from Qualcomm specifically deal with 3G communications and other advanced features.
Verizon Wireless and Sprint Nextel are the two major carriers in the U.S. that rely on Qualcomm's products to support their 3G networks. Qualcomm is the primary chip provider to 3G EVDO networks, and the ITC ruling will prevent any future phones using infringing chips from entering the U.S. Despite the shock to the industry, the ITC is allowing violating products that are already on sale to still be imported, but nothing else.
Verizon Wireless spokeswoman Nancy Stark told reporters that the ruling is a major hit to the industry.
"This is a bad order for the industry. It really impedes our ability to innovate," said Stark.
With the news, the top 3G networks in the U.S. are banding together in an effort to get President George W. Bush to veto the ruling. Verizon Wireless, Sprint Nextel and Vodafone Group are seeking a reversal of the decision by the Bush administration. At this time, the ITC ruling is not yet final but will become so in 60 days if it is not disapproved by the U.S. Trade Representative.
"The way for the industry to move forward is for the president to veto this misguided order," noted Paul Jacubs, chief executive officer of Qualcomm.
Broadcom however disagrees, stating that Qualcomm knowingly violated U.S. patent laws. "Qualcomm was trying to sidestep U.S. patent law, and it is not going to be successful," said Broadcom vice president David Rosmann.
According to the ITC statement: The Commission is issuing a limited exclusion order that bars the importation of Qualcomm's infringing chips and chipsets and circuit board modules or carriers containing them. In addition, the exclusion order bars the importation of certain handheld wireless communications devices, such as cellular telephone handsets and personal digital assistants ("PDAs"), that contain Qualcomm's infringing chips and chipsets.
Last week, a San Diego jury ordered Qualcomm to fork over $19.6 million USD due to violations of Broadcom patents. The patents in question dealt with features such as push-to-talk and video compression.
Qualcomm's list of problems is now longer than ever. Earlier in May, Qualcomm along with ATI and Motorola became the subjects of a patent probe, raised by Tessera Technologies. The ITC launched the probe and is still investigating the claims. Qualcomm and Nokia are also suing each other in court over licensing agreements which expired in April of this year. Nokia is also working with Broadcom to raise antitrust objections to Qualcomm's business practices with European regulators.
Despite the ITC ruling, Qualcomm holds significant 3G related patents, many of which force Broadcom to pay royalties. The two companies started filing patents suits against each other after patent-licensing negotiations failed.
6/8/07
3G Phones Using Qualcomm Chips Banned from Entering U.S. Shores
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