Qualcomm loses ruling on 3G phones

A US federal agency Thursday banned the import of new models of third-generation mobile phones using chips made by Qualcomm, the world’s second-largest supplier.

The International Trade Commission’s decision increased considerably the pressure on the San Diego company to settle with rival chipmaker Broadcom.

The commission had found in favour of Broadcom that Qualcomm’s chips infringed its patent relating to power management – a battery-saving feature on mobile devices.

The six-member ITC’s 4-2 vote follows a federal jury in Santa Ana, California, finding last week that Qualcomm had infringed three other patents owned by Broadcom.

“This is certainly an order that will complicate Qualcomm’s life and make it very uncomfortable for its customers,” said Smith Brittingham, a lawyer at Finnegan Henderson and a former ITC senior investigative attorney.

“In the light of this and the jury’s verdict, there’s a ball starting to roll down a hill that could make it end up considering a settlement.”

Qualcomm’s key role in 3G technologies has put it at the centre of a series of legal disputes over what intellectual property it owns and how much in royalties it is entitled to charge.

Nokia, the biggest handset maker, has balked at renewing a patent licensing agreement with the chipmaker this year, arguing its royalties are too high.

“Qualcomm’s wilful and widespread patent infringement is particularly egregious and ironic in light of its historic practice of seeking unfair compensation for its own patent portfolio,” said David Dull, Broadcom’s general counsel, Thursday.

The ITC decided on a limited exclusion order that would apply only to new models of phones imported from Friday. This compromise decision would “reduce the burden on third parties while affording meaningful relief to the patent holder”, it said.

Its order becomes final after 60 days, giving time for review by the Bush administration.

Qualcomm anticipated a ruling against it last week when it pre-emptively moved for the ITC to stay any order.

Mr Brittingham said the agency had never stayed an exclusion order previously and Qualcomm’s probable next step would be to ask a federal circuit judge to issue a stay so that the ban could not go into effect until an appeal had been heard. An appeal could take up to two years.