LONDON America's strong enforcement of its intellectual property (IP) rights is set to get a major jolt next week when the U.S. Trade Representative Susan Schwab declares on whether to allow or reject the International Trade Commission's ban on the import of 3G phones using Qualcomm Inc's chips that Broadcom Corp. claims infringes it patents.
Broadcom called on the Bush administration to let stand the ITC's ruling in June against Qualcomm for infringing the patents. Meanwhile Qualcomm has been seeking White House intervention to reverse the ITC ruling.
In the run-up to the August 6 decision, Broadcom said it is willing to grant free licenses for its patented wireless technology to state and local public-safety users.
But the companies have not been able to reach consensus and Qualcomm has rejected Broadcom's offer a $6 license fee for each handset for the three years remaining on the main "983" patent involved in the dispute. The license fee would account for about 2 to 2.5 percent of the price of a handset.
Qualcomm said the terms being asked by Broadcom "could have a material impact on our licensing business", and continues to claim the ITC ruling was wrong.
"This has become a huge issue for how the U.S. views and enforces IP across the world. It goes beyond our shores and the outcome will interest for instance Nokia, who is involved in its own dispute at the ITC with Qualcomm. And what will the Chinese think, who are very adapt at overriding IP rules," David Rosmann, Broadcom's vice president of intellectual property litigation told EE Times Europe.
[Rosmann's reference to Nokia concerns one of the long running IPR issues between the Finnish mobile phone maker and Qualcomm which the chip maker took to the ITC last June requesting an investigation into the alleged infringement by Nokia's GSM handsets of six Qualcomm patents. The dispute was set to go to trial in March but has been delayed].
Rosmann suggested the White House ruling, which he suspects will go in favour of Qualcomm, will have a significant impact on U.S. efforts to force other countries to enforce IP rights. "A veto would be seen to be rewarding behaviour that courts and the ITC have ruled illegal, and obviously make it more difficult for the U.S. to persuade other countries to respect American companies' IP rights.
"Equally worrying, the largest patent predator would be seen, by the U.S. government, to be exempt from court rulings and counter claims," said Rosmann.
He added: "Companies usually manage to work this out between themselves. If there is a government veto, it will send out a message that some companies can feel beyond certain remedies."
Qualcomm suffered a setback in its lobbying during the 60 day stay before the ITC ruling goes into effect when late last month Verizon Wireless, which is part owned by Vodafone plc, decided to avoid entanglement in the patent battle and to pay licensing fees to Broadcom.
The deal calls for Verizon to pay licensing fees of $6 to Broadcom for each handset it sells with chips from Qualcomm carrying the disputed technology, or up to $40 million per calendar quarter and up to a lifetime maximum of $200 million. It represented an about-face for Verizon, which had previously supported Qualcomm in the dispute.
The other major U.S. carrier with a CDMA network impacted by the dispute, Sprint, has continued to support Qualcomm's case.