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Qualcomm wins stay of handset ban

Court says phones can be imported despite concerns over patents.

September 13, 2007|From Bloomberg News

Qualcomm Inc. won an appeals court ruling Wednesday that lets customers import new mobile-phone models with its chips into the U.S. while the company fights a trade agency's finding that the technology infringes a Broadcom Corp. patent.

The U.S. Court of Appeals for the Federal Circuit put on hold a ban imposed in June by the U.S. International Trade Commission. The commission had ordered customs officials to block the import of phones that contain the disputed Qualcomm chips after finding that they violated a Broadcom patent.

The appeals court in Washington said there was a "substantial question" as to whether the ban could be imposed on handset makers and phone-service providers. The commission had said the only way to prevent infringement by the Qualcomm chips was to block imports of the phones using them.

"It's a relief for Qualcomm, but it's not the end of the road," said Satya Chillara, a San Francisco-based analyst at Pacific Growth Equities. When the commission "gives an opinion, it's very rare that the court of appeals gives a stay."

San Diego-based Qualcomm is the world's second-biggest maker of chips for cellphones, behind Texas Instruments Inc.

The decision is also a victory for handset makers, including Kyocera Wireless Corp., LG Electronics Inc., Motorola Inc. and Samsung Electronics Co., as well as AT&T Inc., the biggest U.S. wireless carrier. They had argued that they shouldn't be punished for Qualcomm's actions.

The trade commission case "has caused massive disruption of the entire cellular industry in the U.S.," Qualcomm lawyer Alex Rogers said.

Irvine-based Broadcom noted that the order does not lift the ban on Qualcomm, only on carriers and makers that rely on Qualcomm chips. It said it expected the ban to be reinstated.

"We are pleased that Qualcomm will not be permitted to continue its infringement of our patent while [its] appeal proceeds, general counsel David Dull said.

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