Qualcomm-Broadcom patent suit: Ban on chipsets spells doom for wireless carriers and mobile makers

Accused of infringing a Broadband patent, Qualcomm, the second largest manufacturer of chips for mobile phones, has been banned from selling chipsets violating Broadcom's patent. The impact: Future models of 3G mobile handsets that are designed on the Qualcomm chips cannot be sold or imported into the United States.

The decision, taken by the International Trade Commission (ITC), is a major blow to leading handset manufactures like Motorola, LG Electronics, Samsung, and Kyocera and directly impacts major telecom service providers AT&T Inc., Verizon Wireless, Sprint Nextel Corp., and Deutsche Telekom AG's T-Mobile. Though the ban excludes present handset models in the market, it adversely affects long-term investments and rollouts. The mobile phones manufacturing and services space is a very dynamic arena where newer features and technologies get introduced and get obsolescent within very short time spans.

Almost all of Qualcomm's chips are made in Ireland, Taiwan and elsewhere in Asia, and are brought into the U.S. in handsets made by overseas manufacturers. Broadcom argued that the only way to stop the patent-infringement was to block imports of the phones containing the Qualcomm chips.

The trade complaint is part of a broader feud begun in 2004 when Broadcom, known for chips used in television set-top boxes, announced it would enter the bigger mobile-phone market. "We simply want to be adequately compensated for the use of our intellectual property," Broadcom spokesman Bill Blanning said in an e-mailed statement. "To that end, we have made it clear to Qualcomm that we are open to discussions regarding the potential for licensing of our patent. The ball is in Qualcomm's court."

Read the full article at Bloomberg.

The infringements are in the technologies of EV-DO (Evolution-Data Optimized) and W-CDMA (Wideband Code Division Multiple Access), both used for high-speed wireless communication. Qualcomm is contesting the decision and also attempting to have the ban invalidated under U.S. law. If the ban does stay, the impact will be phenomenal in terms of choking the supply of newer devices by service providers looking to take upon the highly anticipated iPhone, which apparently does not use Qualcomm's technologies.

More follow-up on the news:

U.S. bans some cellphone imports in Qualcomm case (Reuters)

Qualcomm Disagrees With Ban on Imports Of Future 3G Handsets (3G)

US bars Qualcomm imports (IDG News Service)