USTR Won’t Lift Ban on New Qualcomm Handsets
The U.S. Trade Representative late Monday let stand the International Trade Commission’s June decision banning new handsets manufactured by Qualcomm because the company had infringed Broadcom patents. An agreement by Verizon Wireless to pay licensing fees to Broadcom of up to $200 million so that it could import new handsets appeared to weigh heavily in USTR’s decision. USTR also said Broadcom had dealt with public safety issues raised by the ban.
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The Department of Homeland Security “has advised that it does not believe there are public safety risks sufficient to justify disapproval of the… limited exclusion order,” USTR Susan Schwab said. “DHS has also advised that Broadcom Corporation’s offer of royalty-free public safety licensing to state and local public safety organizations and its licensing agreements with… major wireless carriers will ameliorate to a significant degree concerns regarding the order’s potential effect on public safety wireless broadband systems and 3G network deployment.”
A wireless industry source said the decision wasn’t a surprise: “Once Verizon negotiated their own agreement on the terms that Broadcom had publicly said were available that demonstrated the terms were commercially reasonable… One has to recognize just how savvy Broadcom was in recognizing the pressure points and making sure they eliminating the pressure by giving this license to public safety.” The source said more agreements with carriers may be in the works: “Broadcom is a profit making organization, and it’s in their interest to get royalties from as many people as possible.”
Stifel Nicolaus had said in an earlier research note that the Verizon Wireless agreement would make the USTR less likely to overturn the ITC’s decision. “This means that, absent additional agreements between carriers and Broadcom (which today’s decision could certainly trigger), or an effective, legal workaround, Qualcomm and the carriers must look to the Federal Circuit Court of Appeals for relief,” the analyst firm said Monday.
Broadcom General Counsel David Dull said the administration decision came after a thorough review. “This decision strengthens the intellectual property rights of all U.S. companies, not just Broadcom, and sends a clear message to all those who would seek to escape the consequences of their patent infringement,” Dull said. “In upholding the ITC remedy, the Administration is also encouraging a market-based solution to patent issues.”