Sticking it to Qualcomm

Not surprisingly, the Bush administration has upheld the ban on importing new models of cell 3G phones that have chips from Qualcomm. The Department of Homeland Security review found insufficient justification for overturning the order on grounds that it would create problems for public safety agencies. I have to applaud the Bush Administration for doing something right!!

In June, the U.S. International Trade Commission banned imports of new mobile devices that carry chips from Qualcomm, as a result of patent dispute between Qualcomm and Broadcom where Qualcomm chips were found to infringe on several patents held by Broadcom, most notably on a patent on conserving battery power. This applies to chips for the high-speed EV-DO (cdma2000) and WCDMA (UMTS) wireless technologies. Qualcomm had appealed to the Bush administration on grounds that a ban on imports of new models of mobile phones would be harmful to national security.

This has to be another great turn of events for Broadcom who has been asking for $6 per phone to settle the dispute (turns out to be a big chunk of dough).

While Verizon Wireless can import new models of EV-DO phones per its paid agreement with Broadcom, Sprint, AT&T, U.S. Cellular, and Alltel cannot import new phones that are infringing. This is a very serious issue since a lot of (if not most) new models of EV-DO and UMTS phones are manufactured outside the United States by manufacturers such as Samsung, LG Electronics, and Motorola. AT&T has limited 3G or UMTS or HSDPA coverage, so it’s a smaller issue for the largest wireless operator in the U.S. than for Verizon Wireless or Sprint.

Qualcomm has, however, developed a software-based workaround that will allow importation of new handset models with EV-DO and UMTS technology, and Sprint is apparently using this method to maintain its stream of new handsets. But Verizon Wireless’s deal with Broadcom raises questions whether this workaround truly bypasses Broadcom’s patent. Olga Kharif of BusinessWeek has a good analysis of this.

Interestingly, Qualcomm is not giving up that easy. Big QC will ask the U.S. Court of Appeals for the Federal Circuit in Washington to reverse the ban and put it on hold while its appeal is considered. Another sign that QC itself doesn’t have much faith in the workaround.

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