The Bush administration has upheld the ban on new cell phones that use Qualcomm chips, putting further pressure on the San Diego wireless giant. Adding fuel to the fire, now a federal judge has ruled that Qualcomm waived its rights to enforce two patents against Broadcom on tv compression, the companies said on Tuesday. Qualcomm shares fell 43 cents to $41.35 in early trading Tuesday.
According to the companies, a San Diego court said Qualcomm could not enforce two patents of high-definition video compression technology because it found the company had deliberately concealed two patents from the group that developed the H.264 video standard. According to Broadcom, Qualcomm had filed the compression patent lawsuit against it “without any prior letter, email, telephone call, or even a smoke signal” offering to license its patent. Qualcomm is appealing the decision.
That ruling was announced shortly after the Bush administration upheld a U.S. government ban against the importation of some phones that include Qualcomm chips found to be infringing on a Broadcom patent.
In June, the U.S. International Trade Commission banned the importation of all new phone models that use Qualcomm chips as punishment for the company infringing on a patent held by rival Broadcom that helps conserve battery power.
Broadcom said, “In upholding the ITC remedy, the Administration is also encouraging a market-based solution to patent issues that is in the best interests of American consumers, U.S. companies and global patent protection”. Qualcomm said it will appeal and renew its request for a stay of the International Trade Commission (ITC) ban on imports of its future 3G models.
Verizon agreed to pay up to $200 million in royalties to Broadcom in order to avoid any disruptions in its handset lineup (see BusinessWeek, “Sidestepping the Qualcomm Ban“). It appears unlikely that Verizon would be willing to eat the entire $6 extra cost. Sprint, also intent on bypassing the legal fray, was rumored to be working on its own workaround.
In 2006, 83 million cell phones using Qualcomm chips were sold in the United States, according to market research firm In-Stat of Scottsdale, Ariz. Qualcomm argues that it was not infringing on the patent controlled by Irvine-based Broadcom.
Qualcomm says it has come up with new software that would allow it to eliminate Broadcom’s patented technology from its chips.
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