Qualcomm’s fight with Broadcom has echoes of Research in Motion’s battle with NTP, settled in March 2006 after four years of legal action.

Rim paid $612m to end a patent infringement dispute with NTP that threatened to shut down its Blackberry service in the US.

Qualcomm is now under pressure itself to settle with Broadcom, over infringing its patent for power management in 3G mobile phones.

The International Trade Commission has ordered that the guilty chips in future phone models should be excluded from the US. However, the importation ban would hit not just Qualcomm, but handset makers such as Motorola and carriers such as AT&T, as well as consumers.

Qualcomm is hoping President Bush will step in. It admitted on an analyst conference call today that a presidential veto of an ITC exclusion order is rare, but argued that a situation where so many third parties would be impacted was equally unusual.

The San Diego chipmaker could spin this out longer with an appeal, but analysts asked why Qualcomm could not just reach a settlement now and put to bed its two-year dispute.

“They are seeking terms that would be destructive to our business model, they are terms that we just cannot accept,” said Louis Lupin, general counsel.

So it is not just about money, it seems. Rather, Broadcom brought the patent dispute in part to give itself leverage with Qualcomm on licensing its rival’s patents.

Broadcom needs to licence Qualcomm’s W-CDMA technology to make its own 3G chips. Like others in the industry, notably Nokia, it has complained at the royalty rates charged by Qualcomm.

It may want to tie a settlement over its power-management patent to a deal on lower W-CDMA royalties.

But that would set a precedent Qualcomm would feel it could never afford.

June 7th, 2007 in Telecommunications | Permalink