Verizon Wireless has broken ranks with chipmaking giant Qualcomm Inc., signing a licensing deal with Qualcomm rival Broadcom Corp. to avoid a ban on U.S. imports of new cell phones.
An adverse patent ruling by the U.S. International Trade Commission found that Qualcomm has infringed on a Broadcom patent for battery power conservation, blocking the import of tens of millions of units of future models such as the Motorola RAZR 2. About 80 percent of Verizon Wireless phones are Qualcomm-based. While existing models will be grandfathered in and remain on sale, Broadcom has offered to license its technology to Qualcomm to avoid future handset blockage.
Verizon will pay $6 per patent-infringing handset, up to $200 million over the life of the agreement.
The ban has sparked an outcry from the wireless operator community, as overall about 25 percent of handsets are based on Qualcomm chips. Carriers say the move will prevent innovation, put the United States behind the rest of the word and lead to higher costs being passed onto consumers. Verizon and others have been trying to reverse the ITC ruling, joining Qualcomm’s request of 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."
The White House has until Aug. 6 to overturn the decision. Verizon, however, has now withdrawn from the request to halt the ban.
Broadcom Corp. www.broadcom.com
Qualcomm Inc. www.qualcomm.com
Verizon Wireless www.verizonwireless.com
