Qualcomm Product Ban Looms

San Diego chipmaker Qualcomm took a one-two, patent-infringement punch Monday from both the Bush administration and a federal court.

The first blow came when the White House refused to veto a U.S. International Trade Commission (ITC) order banning the import of Qualcomm future 3G mobile broadband handset models and cell phones. Later in the day, in a separate case, a federal court ruled Qualcomm couldn’t enforce its patents relating to video transmission.

Qualcomm immediately announced it would appeal both decisions. In the meantime, however, it faces an import ban set to go into effect on Tuesday; Qualcomm plans to seek an emergency stay of the order before the U.S. Federal Court of Appeals. In July, the same court declined to issue a stay until after a decision on the veto.

U.S. Trade Representative Susan Schwab said after a review of the veto request she would not lift the import ban imposed by the ITC in June. The import restriction came in the wake of a 2006 ITC ruling that Qualcomm’s chips and chipsets infringe on a Broadcom patent related to power-saving technology.

In the second case, a San Diego federal judge said Qualcomm’s conduct during an infringement trial involving Broadcom amounted to “abuse,” particularly withholding critical documents. The judge ruled Qualcomm’s behavior negated its right to enforce the patents.

“The court’s findings indicate that this is one of the most serious and egregious cases of standards abuse and litigation misconduct that our industry has ever witnessed,” said David J. Rosmann, Broadcom’s vice president of intellectual property litigation. “While we are gratified with the court’s ruling, we are also disappointed that Qualcomm chose to stoop to such tactics.”

The ITC-banned chips and chipsets are used in handheld wireless communications devices, including cellular telephone handsets that operate on EV-DO and WCDMA networks used by Verizon, Sprint, AT&T and T-Mobile USA. Police, fire and other first responders also use equipment with Qualcomm chips.

The order does not apply to existing handheld wireless communications devices that were being imported for sale to the general public on or before June 7.

Monday was the deadline for the White House to respond to the veto request made by Qualcomm on June 7. President Bush delegated the decision to Schwab.

“While we recognize legitimate concerns that certain market participants and others have expressed regarding the potential effects of these orders, we believe that steps are being taken to address those concerns,” Schwab said in a statement.

Chief among those concerns is the impact on first responders who are building 3G networks using Qualcomm-based chip technology. Schwab said Broadcom’s offer of royalty-free public safety licensing to state and local public safety organizations largely eliminated public safety concerns.

Schwab also pointed to a July licensing agreement Verizon Wireless reached with Broadcom that permits the country’s No. 2 wireless carrier to continue importing and selling mobile devices that are the subject of the current litigation between Broadcom and Qualcomm.

“We also understand that other market participants are investigating the use of a non-infringing software workaround,” Schwab said. “We believe that such licensing agreements and workarounds will address in large part the concerns raised about the delay in 3G network deployment.”

For Qualcomm, the next step in its litigation brinksmanship battle with Broadcom is the U.S. Federal Circuit Court of Appeals. Qualcomm also said it is working with its customers on the implementation of new software, although the acceptability of the workaround is subject to challenge by Broadcom.

“We will pursue all legal and technical options available to us to minimize the impact of the ITC order on consumers, our customers and the entire wireless industry,” Paul E. Jacobs, CEO of the San Diego-based Qualcomm, said in a statement.

Qualcomm again insisted it had done nothing wrong. “Qualcomm maintains that none of Broadcom’s patent claims are valid or were infringed upon by Qualcomm,” the company said in a statement.

The Irvine, Calif.-based Broadcom said it was “gratified” by the veto denial.

“This decision strengthens the intellectual property rights of all U.S. companies, not just Broadcom, and sends a clear message to all those who would seek to escape the consequences of their patent infringement,” said David A. Dull, Broadcom’s senior vice president and general counsel.

In May, a Santa Ana, Calif., district court found Qualcomm guilty of willful infringement of three different Broadcom patents. The jury awarded Broadcom $19.6 million in damages, which may be trebled since the infringement was ruled intentional.

Earlier this year, a San Diego jury rejected Qualcomm’s claims that Broadcom infringed on two Qualcomm patents involving video compression. In yet another lawsuit between the two companies, Broadcom claims Qualcomm has engaged in a “pattern of misconduct” across multiple technologies and through various standards bodies.

News Around the Web