ITC

Battle of the bans

Tue, 21 Aug 2007 06:59:59 -0400

The dark cloud looming over Qualcomm grew even more ominous last week when Nokia ripped a page from the Broadcom playbook, petitioning the U.S. International Trade Commission to ban the importation of Qualcomm chips that Nokia asserts violate five of its CDMA and W-CDMA/GSM patents. According to Nokia, Qualcomm engaged in unfair trade practices by infringing on Nokia's patents after a 15-year licensing agreement between the two companies expired in April. Next month, the ITC is also scheduled to hear Qualcomm's rival petition to ban the import of Nokia GSM phones--at the same time, Qualcomm is still scrambling to come up with a last-ditch legal or technical solution to minimize the impact of the ITC's June chip ban favoring Broadcom. And as for Nokia, it faces a separate ITC battle of its own: Last week, wireless technologies developer InterDigital Inc. filed a complaint with the commission alleging that the handset giant infringed on two of its patents. (Got all that?)

Needless to say, there's blood in the water, and intellectual property owners large and small are moving in for the kill. The Broadcom/Qualcomm skirmish has identified the ITC as a legislative body ready, willing and able to thrust itself into the intellectual property debate, and while IP disputes are plainly within the scope of its authority, the commission is now the 800-pound gorilla dominating the mobile technology landscape, making decisions that are profoundly impacting the future of this business. According to its own website, the ITC "is NOT a court of law," but its rulings are no less meaningful or far-reaching, especially given its power to block imports and threaten product relationships with network operator heavyweights in the process. Which makes it all the more remarkable and puzzling that some of the biggest names in the industry are entrusting Washington to determine who owns what and who pays whom: Win or lose, that's a dangerous proposition. -Jason

White House declines to veto ITC's Qualcomm ban

Tue, 07 Aug 2007 06:59:58 -0400

The Bush administration on Monday declined to overturn the International Trade Commission's ban on importing mobile devices containing Qualcomm chips found to violate patents controlled by rival Broadcom. Barring judicial intervention, the import ban will go into effect Tuesday, according to U.S. Trade Representative Susan C. Schwab. "In this case, after carefully weighing these considerations, advice from agencies, and information received from interested parties, I have decided to permit the limited exclusion order and cease and desist order that the USITC issued in its investigation," Schwab said in a statement issued late Monday.

Qualcomm actively lobbied President Bush to reject the ban, recommended in June after the ITC determined that some Qualcomm EVDO chips, chipsets and circuit board modules infringed on Broadcom's intellectual property holdings. Per U.S. trade laws, the president is empowered to overturn ITC rulings, although such cases are extremely rare. Qualcomm's sole remaining hope is to successfully petition a federal appeals court to overturn the ITC's decision--in a statement released in the wake of the White House's decision, Qualcomm CEO Paul Jacobs said, "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."

Short of a last-minute appeals court reprieve, it seems probable Qualcomm will be forced to negotiate a long-term settlement with Broadcom. Despite support from its carrier partners and wireless industry association CTIA, Qualcomm's bargaining power is virtually nil--in mid-July, Verizon Wireless inked a deal to pay Broadcom $6.00 for each 1xEV-DO handset, PDA or data card including the contested technology, with a maximum payment of $40 million per calendar quarter and a lifetime maximum payment of $200 million. The agreement also provides Verizon a license to the six Broadcom patents in question.

For more on the Bush decision:
-read this Forbes article

Related articles:
Appeals court rejects Qualcomm request
Qualcomm rejects Broadcom settlement offer

Appeals court rejects Qualcomm request

Tue, 24 Jul 2007 06:59:58 -0400

The U.S. Court of Appeals for the Federal Circuit on Friday rejected Qualcomm's request to delay an import ban on new mobile devices containing the company's chips, which the International Trade Commission ruled infringe on patents held by rival chipmaker Broadcom Corp. Qualcomm argued for the stay on grounds that President Bush is mulling a veto of the ITC ban, but the court countered it cannot issue a stay during the 60-day presidential review period that ends August 6. "The Court of Appeals for the Federal Circuit denied the request for stay on a procedural basis that the issue was not ripe for their consideration until after the passage of the presidential review period," Qualcomm spokeswoman Emily Kilpatrick told the San Diego Union-Tribune. "It made no determination of the substantive merits of the stay request, and the parties are free to renew their request for a stay if the president does not veto the ITC decision."

Qualcomm said that it will re-file its appeal for a stay if Bush does not veto the ITC order. In addition to support from wireless industry heavyweights including AT&T, Sprint Nextel and T-Mobile, Qualcomm's veto push also gained backing from public safety agencies, who argue the ban could impact emergency communications, as well as five Republican members of the U.S. House Energy and Commerce Committee. The ITC order "will stifle the efforts of wireless carriers to deliver cutting-edge technologies to American consumers," wrote Deputy United States Trade Representative Susan Schwab last week in a letter also signed by Reps. Joe Barton of Texas and Cliff Stearns of Florida.

Qualcomm nevertheless lost a key ally Thursday when Verizon Wireless announced a licensing deal with Broadcom, agreeing to pay the chipmaker $6 for each handset that ships with patent-infringing Qualcomm technology. Verizon will pay out a maximum of $40 million a quarter, or $200 million over the life of the agreement; the deal also gives the carrier license to five other Broadcom patents also subject to legal wrangling. The Broadcom deal effectively puts to rest questions about Verizon's right to introduce new handset models; in a subsequent press release, Qualcomm called the Verizon/Broadcom license agreement "a positive development," adding it "removes uncertainty…by ensuring that Verizon Wireless will be able to continue to sell wireless broadband products powered by Qualcomm's chipsets and software." The release couldn't resist a jab at Broadcom, however, stating "the announced economic terms are far less drastic than any terms previously demanded by Broadcom from Qualcomm."

Not all of the news is quite so bleak for Qualcomm, however: On Monday the chipmaker announced a royalty-free agreement with Telechips enabling the Korean semiconductor company to incorporate patented Qualcomm technologies to design, manufacture and sell semiconductor chip products implementing the FLO air interface mobile TV standard. "With the demand for affordable multimedia content growing, Qualcomm is pleased to have executed multiple FLO chip agreements in rapid succession since the inception of its FLO chip program last year," said Qualcomm Technology Licensing president Marv Blecker in a prepared statement. "This agreement will allow Telechips to provide its customers with high-quality FLO chips that enable delivery of a superior mobile broadcast experience combining live streaming TV, on-demand programming and a host of interactive services."

For more on Qualcomm's appeals court setback:
- read this San Diego Union-Tribune article

For more on the Qualcomm/Telechips FLO agreement:
- read this release

Related articles:
- Qualcomm rejects Broadcom settlement offer
- Qualcomm/Broadcom: Sizing up the lobbyists

CTIA outlines impact of Qualcomm ban

Tue, 17 Jul 2007 06:59:58 -0400

Wireless industry association CTIA issued a formal statement in response to a new report released by consulting firm the Brattle Group forecasting the economic impact of the International Trade Commission's recent order banning imports of mobile devices with some Qualcomm chips. "CTIA-The Wireless Association is deeply concerned that the ITC order banning new models of wireless broadband handsets will cause unprecedented economic harm to tens of millions of American wireless consumers, and because of that we urge President Bush to veto the order," writes CTIA president and CEO Steve Largent. "The Brattle Group analysis concludes that the ITC order will cause direct economic harm to U.S. consumers and producers estimated to range between $4.3 and $21.1 billion, and will cause billions more in lost productivity across the U.S. economy."

According to the Brattle Group report--commissioned by Qualcomm--direct economic harm to consumers alone could be as high as $17.7 billion, depending on the duration of the ITC ban. The report also estimates the FCC's upcoming spectrum auction could suffer lost revenues up to $1.4 billion. "Beyond the telecommunications sector, the ITC decision will cause substantial harm to the entire U.S. economy," Largent continues. "The Brattle Group concludes that the effect of the ITC order will spill over to other dynamic sectors, reducing U.S. productivity and resulting in several billion dollars in additional GNP losses. The ITC order is particularly troubling because it allows a private patent dispute to inflict unprecedented public harm upon innocent third parties. Under the statutory scheme devised by Congress, the Administration is the last line of defense for protecting the public from these massive economic damages. We strongly urge the Administration to disapprove the ITC order."

President Bush has until August 6 to veto the ITC ban. The Brattle Group report is available here.

For more on the CTIA statement:
- read this release

Related article:
- Qualcomm rejects Broadcom settlement offer

Qualcomm rejects Broadcom settlement offer

Tue, 03 Jul 2007 06:59:58 -0400

Wireless technology developer Qualcomm rejected an offer from rival Broadcom to settle their ongoing legal battle over chip patents. Broadcom reportedly offered to bill Qualcomm $6.00 for each handset sold with technology based on the disputed patent--Qualcomm declined, saying that such an agreement would cost the company between $1.5 billion and $2.0 billion during the three years remaining on the patent. Qualcomm responded by offering to pony up $100 million as well as agreeing to reciprocal royalty-free access to patents between the two companies. Broadcom's take: Qualcomm has "failed so far to respond substantively" to its offer.

On June 7, the U.S. International Trade Commission banned U.S. imports of new mobile phones manufactured with Qualcomm chips after determining infringement on Broadcom patents--Qualcomm said plans to petition a federal court to prevent the ITC ban, and suggested it would seek President Bush to override the order as well. According to Deutsche Bank analyst Jonathan Goldberg, the Broadcom settlement offer represents a positive move forward, adding that Qualcomm recognizes the necessity of putting the matter to rest. "We think Qualcomm internally has a strong interest in settling with Broadcom on reasonable terms so they can return their focus to securing a new license agreement with Nokia and on their core licensing and chipmaking businesses," Goldberg wrote.

For more on the Qualcomm/Broadcom battle:
-read this Forbes article

Related article:
-Fallout from the Qualcomm ban

Patent rites

Jason Ankeny — Tue, 26 Jun 2007 06:59:59 -0400

The air seemed to leave the room during Paul Jacobs' annual keynote address at last week's BREW 2007 conference as the Qualcomm CEO turned his focus to the subject on everyone's minds: his company's ongoing patent infringement battle with semiconductor supplier Broadcom and the resulting International Trade Commission decision to ban import of 3G handsets employing Qualcomm chips ruled to violate Broadcom patents. "We think the ITC's decision and remedy are unreasonable and wrong," a visibly tense Jacobs said. "We will immediately seek an emergency stay, and ask the president to veto the ITC decision. But these actions have not distracted us from our focus--we will continue to persevere and execute on our vision."

Hours later, Qualcomm's vision seemed to grow blurrier when the ITC denied its stay request, proclaiming in an eight-page ruling issued Thursday that the chipmaker failed to meet a "four-prong test" applied by courts to determine whether to grant preliminary injunctions. (And if you've ever undergone the four-prong test, you know just how painful it can be.) Industry association CTIA is already imploring President Bush to step in against the ITC decision, while Qualcomm will likely also seek intervention from the U.S. Court of Appeals.

But it seems Jacobs knew exactly what he was talking about after all. Reports out of Sprint suggest the operator is already implementing a Qualcomm software patch as a workaround against the ban, with none of its upcoming handset launches negatively impacted by the ITC's actions. In other words, life goes on. You can't be surprised by this development--some pundits were ready to declare the ITC's decision tantamount to outlawing innovation across the U.S. wireless space, but if anything, Qualcomm's software fix suggests that the industry simply moves too fast for the government to play catch-up.

Regardless of which side of the Qualcomm/Broadcom debate you support, the real problem lies with a U.S. Patent Office and Trademark Office that thrives on patent quantity, not quality. Since 1991, the PTO has generated all of its funding via patent and trademark processing fees--no wonder the agency has issued over seven million patents since March 2006 alone. A PTO concentrating on improved, clearer-drawn patents issued in more limited numbers would create intellectual properties far less susceptible to the kinds of costly, convoluted court battles that inevitably result when an innovation's origins and intentions are cloudy. When patent cases go to trial, the only clear winners are the lawyers--whoever patented the concept of billable hours was the most prescient thinker of them all. - Jason