Broadcom gives Qualcomm a taste of its own medicine

The unending saga of Broadcom vs. Qualcomm took another twist when Broadcom offered to receive $6 for every handset sold with a Qualcomm chip that was found to infringe a patent for a battery- saving feature. Qualcomm summarily rejected the offer saying it would have to pay US$1.5 billion to US$2 billion over the three years remaining on the patent. Now, I’m no fan of Qualcomm (Although I have a lot of respect for QC) because Qualcomm extracts a huge bounty from its patent portfolio that covers a lot of 2G and 3G wireless technology. However, this time around Broadcom had the audacity ask for $6-per-phone, saying it amounted to around 2 percent to 2.5 percent of the price of a handset.

”a small fraction of the revenue generated for each such handset by the carriers”

This is where I disagree with Broadcom. At this rate, a cell phone would cost between US$240 and US$300. Baloney! A handset vendor can produce a low-cost GSM handset for as low as US$10, and I believe that 3G phones are around US$100.

What’s interesting are the barbs fired by each company in response:

” Broadcom is asking for a royalty rate for one patent greater than the rate we ask for our entire portfolio,” says Qualcomm spokesman Bill Davidson.

”The per-handset royalty we’re asking for is less than the royalty Qualcomm demanded from Broadcom ” during a lawsuit earlier this year over video-compression patents”, says Broadcom’s Bill Blanning.

This fight is bitter because the U.S. International Trade Commission on June 7th banned the import of future models of 3G handsets that infringes a Broadcom patent. This leaves handset vendors like Motorola, Samsung, and LG, and wireless operators like Sprint and Verizon out in the cold – so they are ganging up to put the ban on hold. Qualcomm is now seeking a presidential veto on the ban on importing anything with these chips.

I really hope that Qualcomm will have to pay a substantial amount to Broadcom for the patent infringement. Why? because this is exactly what Qualcomm does to others with its massive patent portfolio.

I hope QC and Broadcom can settle the dispute quickly without interrupting imports of future 3G handset models into the U.S. But mostly, I really hope that George Bush doesn’t get involved because he’ll mess this one up too (its also not important to national security or hugely beneficial to the public)! For Qualcomm, what goes around comes around!

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