Mobile phones and carriers heavily affected; Broadcom says its happy
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.
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.
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.
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.
"I f***ing cannot play Halo 2 multiplayer. I cannot do it." -- Bungie Technical Lead Chris Butcher
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