Friday, July 20, 2007

Verizon does deal with Broadcom to avoid Qualcomm problem

There have been developments in the Qualcomm/Broadcom matter.

#1. The CAFC dismissed Qualcomm's appeal of the ITC order. Reuters reported:

The U.S. Court of Appeals for the Federal Circuit said it dismissed the appeal because it lacked jurisdiction over the June 21 order by the International Trade Commission (ITC). "An ITC determination does not become final for purposes of judicial review until the president has either approved of the determination or failed to disapprove within 60 days," the court said.

#2. Verizon did a deal with Broadcom.

InformationWeek reported the matter in the following way:

Not that it [Verizon] had much choice in the matter. With the ITC's ban on importing 3G chips from Qualcomm mere weeks from taking effect, Verizon needed to take steps to ensure it could continue to sell new phones. So it struck a licensing deal with Qualcomm competitor Broadcom.

Verizon Wireless will pay Broadcom $6.00 for each 1xEV-DO handset, PDA or data card sold after the effective date, subject to a maximum payment of $40 million per calendar quarter and a lifetime maximum payment of $200 million. The agreement provides Verizon a license to the six Broadcom patents currently being litigated between Broadcom and Qualcomm. Broadcom offered Qualcomm this same $6-per-chip deal, but Qualcomm turned Broadcom down.

The move was certainly unexpected. Verizon had initially voiced support for Qualcomm, which lost a patent infringement case to competing wireless chipmaker Broadcom. The U.S. International Trade Commission eventually banned Qualcomm from importing the infringing chips, which contain technology related to power consumption. The ban would effectively prevent Verizon (and Sprint and Alltel) from selling any new models that contain the 3G chips in question. Obviously this wouldn't be the best thing in the world for Verizon. So it had petitioned the ITC, along with other corporations, to overturn the ban.

The Los Angeles Times noted:

Stepping out of a raging dispute between two Southern California chip makers, Verizon Wireless said Thursday it would pay licensing fees to Broadcom Corp. to avoid a ban on importing new mobile phones.

Irvine-based Broadcom will receive $6 per handset — up to $200 million over the life of the agreement, the companies said — so that Verizon can continue selling phones laden with the latest technology.

The deal was announced just before Broadcom released second-quarter results that included a 68% drop in net income and a 4.6% fall in revenue, both roughly in line with what analysts expected.

The agreement puts more pressure on San Diego-based Qualcomm Inc. to settle a series of patent violations alleged by Broadcom.

**See also


Blogger Unknown said...

As far as i understand Federal Court of Appeal has shown inability to hear the case while matter is pending for president veto.

It means just delay in hearing and qualcomm still stands chance of getting stay on ban .

As far as verizon has concern, i guess it is good business deal for both company but how it would benifit broadcom more than $200 milion in wireless business that is questionable as they don't have any EVDO chips to supply to Verizon supplier and i don't see Qualcomm giving them those easily.

my 2 cents!!!

1:36 PM  
Blogger optionman said...

What does qualcomm do with its other customers not part of the Broadcom/Verizon deal? Can or would qualcomm refuse to ship to Verizon based on the injunction in order to protect its other customers that support its request to overturn the court ban? Can qualcomm permit broadcom to call the tune as to which customers qualcomm can sell its products.

7:42 PM  

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