Qualcomm Chips Blocked

An adverse patent ruling by the U.S. International Trade Commission has banned U.S. imports of new cell phones with Qualcomm Inc. chipsets, sparking an outcry from the wireless operator community.

While existing models will be grandfathered in and remain on sale, tens of millions of units of future models such as the Motorola RAZR 2 will be blocked from entering the U.S. market. The ITC said the Qualcomm chips violate a patent held by Broadcom Corp. Broadcom has offered to license its technology to Qualcomm to avoid handset blockage.

For its part, Qualcomm has asked a federal court to place an injunction on the ban, hoping for a veto of the order from President Bush. “We believe the commission has overstepped its statutory boundaries and has not afforded due process to manufacturers and operators,” said Qualcomm CEO Paul Jacobs on a conference call. “If (the ruling) stands, it will have a negative impact on consumers.”

Operators say the move will prevent innovation, put the U.S. behind the rest of the word and lead to higher costs being passed onto consumers. About 80 percent of Verizon Wireless phones, for instance, are Qualcomm-based. Overall about 25 percent of handsets are based on Qualcomm chips.

Verizon said it will join Qualcomms quest for a block and veto of the ban. According to the Associated Press, AT&T Inc. is studying the ruling and considering its options, while Sprint declined to name its plans.

The White House has 60 days to veto the ruling.

AT&T Inc. www.att.com

Broadcom Corp. www.broadcom.com
Motorola Inc. www.motorola.com
Qualcomm Inc. www.qualcomm.com
Sprint www.sprint.com
United States International Trade Commission www.usitc.gov
Verizon www.verizon.com