U.S bans import of cellphones containing Qualcomm chips

A U.S. federal Agency has banned the import of new third-generation mobile phones made with Qualcomm semiconductors because of patent infringement. The patent held by broadcom covers a technology that enables a cellphone to conserve battery power when the cellphone is out of range of a wireless network.

The International Trade Commission`s decision to impose the ban has put considerable pressure on San Diego based Qualcomm, the world`s second largest supplier of chips. The ban, however, does not apply to models being imported at present, just to the future models.

The ruling comes as a blow not just to Qualcomm, the chip suppliers, but also to wireless handset makers like Motorola and Samsung as well as service providers such as Verizon Wireless, Sprint Nextel Corp. and AT&T Inc.

The decision has hit Verizon Wireless quite hard as 80% of the phones sold by them use Qualcomm technology. Verizon Wireless, the second largest mobile service provider in the U.S, has said that it will ask the Bush administration to remove the ban.

Paul Jacobs, Qualcomm`s chief executive has said that the ban will adversely effect the import of tens of millions of cell phones. Qualcomm has also said that it will approach the U.S. Federal Circuit Court of Appeals, a court that specializes in patent cases, for an emergency stay on the order.

“This is a bad order for the industry, and it's going to freeze innovation” Verizon Wireless spokeswoman Nancy Stark said. “We were never accused of infringing on anything, yet we're being punished.” At present the other service providers Sprint Nextel and AT&T have refused to comment and are watching the situation closely. Lou Lupin, Qualcomm's general counsel has said that the White house has 60 days to reject the ruling.

The ITC is an independent federal agency that studies whether imported products are in violation of U.S patents, trademarks or copyrights and has the authority to ban any product found to be guilty of infringement. Bill Blanning, the spokesman for Broadcom is in favour of the ITC ruling and said, “We simply want to be adequately compensated for the use of our intellectual property”.

After news of the ban, shares of Qualcomm rose 88 cents or 2.2 percent while Broadcom`s shares rose by 39 cents or 1.3 percent.