The president last week declined to veto his trade office’s ban on new 3G handsets containing a patent-infringing Qualcomm Inc. chip, sending the vendor back to court to pursue new means to end the ban.
Qualcomm filed a request on Aug. 8 in the Court of Appeals for the Federal Circuit for an emergency stay of the ITC’s ban and said it would file its full appeal soon.
The ban prevents Qualcomm’s domestic handset vendor and carrier customers from importing 3G handsets with Qualcomm’s chips that the ITC has ruled infringe on a power management patent owned by Broadcom Corp. The ban affects handsets that were not already on the market by June 7, the date the ITC announced its ban.
The court’s decision on whether to grant an emergency stay in the case could take a week or two, according to both Qualcomm and Broadcom spokesmen. But, according to Broadcom’s David Rosmann, vice president for IP litigation, the appeals court has never granted such a stay on an ITC decision that survived a presidential veto.
Qualcomm’s appeal of the ITC’s infringement finding and its handset ban could take as much as 18 months, according to Rosmann. Qualcomm was unable to provide a spokesperson to answer questions in the matter by press time, instead responding via email to a reporter’s questions about basic facts in the case.
Qualcomm braced for decision
Even before the window closed last week for a presidential veto, Qualcomm executives on a July 25 earnings call had prefaced their remarks about enviable earnings in their fiscal third quarter by acknowledging they could not predict the timeframe and cost of resolving the myriad legal challenges the company faces. The chip vendor is embroiled in a number of other patent infringement cases with Broadcom and a slew of legal and regulatory challenges to its practices by other industry players such as Nokia Corp. and Texas Instruments Inc. Qualcomm is also the litigant in numerous patent-infringement cases with Nokia.
Despite its position in the eye of several legal storms, Qualcomm last week continued to argue its case via press release using aggressive language. Qualcomm said that “none of Broadcom’s patent claims are valid or were infringed upon by Qualcomm.” (The ITC, of course, found that Broadcom’s so-called “983” patent is valid and that Qualcomm infringed upon it, and its ban on offending handsets is now in place.) In the press release, CEO Paul Jacobs continued to cite his company’s commitment to preserving technical gains made in disaster preparedness and emergency response, implying that rivals such as Broadcom were working against public safety.
“Broadcom is attempting to disrupt the entire U.S. cellular industry . (and) is playing kingmaker of the industry,” Qualcomm said.
According to Rosmann, however, the U.S. Trade Representative Susan Schwab had noted in her statement declining to veto the ITC’s decisions that the Department of Homeland Security-“the ultimate public-safety group,” the Broadcom attorney said-had not supported a presidential veto.
Workaround solution
Qualcomm re-emphasized its commitment to providing its customers with new software, i.e., a “workaround,” that could pass muster with officials charged with enforcing the ITC’s ban.
“We are confident (the workaround) is outside the scope of the ITC order,” Qualcomm said, “. and (we’re) confident in the technical performance of this software. Customer acceptance has been strong.”
Rosmann said that Qualcomm had not shared information with Broadcom on the workaround.
“Once we’re able to review the workaround, we’ll determine whether it infringes on our patent,” Rosmann said. “If it infringes, we’ll challenge it. If it doesn’t, we won’t. They could approach us in good faith and avoid a confrontation.”
Rosmann said that during the 60-day window for a presidential veto, Qualcomm had been able to import phones with either its offending chip or with the workaround “under bond”-essentially monies paid into escrow of 5% of each handset’s value and 100% of the value of the offending chip. But that option ended last Monday when the president declined a veto, according to Rosmann.
Broadcom’s offer of a $6 per handset licensing fee stands to Qualcomm and all other players and the chip vendor is in discussions with numerous parties, Rosmann said. Broadcom has already struck a licensing deal with Verizon Wireless to allow the latter to avoid the import ban. Broadcom has offered all public-safety groups at state, local and nonprofit levels a no-cost license. Federal agencies are exempted from the ITC ban, the Broadcom attorney said.
