Qualcomm to Seek Bush Veto of ITC Order

Qualcomm moved quickly today to stop an International Trade Commission (ITC) order banning the import of future models of 3G mobile broadband handsets containing Qualcomm chipsets and software.

The San Diego-based Qualcomm said it would ask President Bush to veto the ITC order while also seeking an emergency stay of the ban from the U.S. Federal Circuit Court of Appeals. The ITC order is subject to presidential review for a period of 60 days.

“We will ask the White House to veto this decision and avoid turning back the clock on the tremendous gains that have been achieved in mobile broadband communications, disaster preparedness and emergency response,” Qualcomm CEO Paul E. Jacobs said in a statement.

The ban comes after a December 2006 ITC ruling found that Qualcomm’s cellular chips and software infringe on a Broadcom patent related to power-saving technology. The 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.

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, 2007.

“While there is no immediate disruption to Qualcomm’s ability to import chips, this decision does immediately affect third parties who were not even permitted to appear in the infringement proceeding,” Jacobs said. “We believe the Commission has not afforded manufacturers and operators, who will bear the brunt of this order, an adequate opportunity to defend their interests.”

The ITC said that while the ban on handsets would “impose great burdens” on third parties, a ban on only the Qualcomm chips and chipsets would provide little relief for Broadcom. The ITC added that allowing companies to continue importing previously imported models would reduce the burdens on third parties.

“We are very pleased with the ITC’s ruling, and gratified that the commissioners followed the letter and spirit of their charter, which is the protection of American products from unfair trade practices,” David A. Dull, Broadcom’s senior vice president and general counsel, said in a statement. “In this case, Qualcomm and its customers have been importing products that use Broadcom’s valuable intellectual property without permission.”

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. Broadcom also plans to seek an injunction to bar future infringement by Qualcomm.

The Irvine, Calif.-based Broadcom said it plans to return to court to seek damages and a permanent injunction for the patent involved in the ITC case.

“We simply want to be adequately compensated for the use of our intellectual property,” Dull said. “To that end, we have made it clear to Qualcomm that we are open to discussions regarding the potential for licensing of our patent. The ball is in Qualcomm’s court.”

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

According to Broadcom, Qualcomm covertly dominated the 802.20 working group committee of the Institute of Electrical and Electronics Engineers (IEEE) by hiring working group members who didn’t disclose their affiliations with Qualcomm, in the hopes of winning votes that favored its technology at the expense of others.

In yet another legal action, Broadcom has joined five other wireless companies in filing a complaint against Qualcomm with the European Commission. The companies claim Qualcomm is violating European competition law by failing to meet the commitments it made to international standards bodies to license its technology on fair, reasonable and non-discriminatory terms.

Broadcom has made the same complaint with the Korean Fair Trade Commission.

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