Patent spat threatens US handset market

An intellectual property dispute between Broadcom and Qualcomm has the potential seriously to damage the US mobile handset market, experts have warned.

The warning from Gartner comes after Broadcom won a ruling from the US International Trade Commission (ITC) that some Qualcomm processors and chipsets infringed on one of its patents.

The ruling has resulted in a US import ban on mobile phones that contain certain Qualcomm-designed chips.

The ban affects some mobile phones that use Evolution Data Optimized (EV-DO), Wideband Code Division Multiple Access (WCDMA) and High-Speed Downlink Packet Access (HSDPA) technologies.

In a newly published Gartner advisory, analysts Alan Brown and Hugues J. De La Vergne said that the import ban will apply to about nine models that manufacturers plan to introduce later in 2007.

"Unless the parties can settle the dispute, the ITC's ruling will reduce the range of phones that US operators can offer their customers. Consumers will delay purchases, seek alternatives or buy models from existing ranges," the analysts stated.

If the ruling is made final, Gartner estimates that it will mean 10 million to 20 million fewer sales of EV-DO, WCDMA and HSDPA phones in the US in 2007.

In a separate case before the ITC, Qualcomm is seeking to bar imports of Nokia products because it believes that Nokia's technology infringes its patents.

"Success for Qualcomm in this case would mean an even slimmer choice of phones for US consumers," the Gartner analysts warned.

"Qualcomm can appeal against the Broadcom decision, and it may choose to rework its chips to exclude the infringing material.

"If the appeal fails, or if the technology proves essential, Qualcomm may have to sign licensing or cross-licensing deals with Broadcom."

The advisory added that, if the ITC's ruling is upheld, it brings into question the control that Qualcomm, or any other company, can exert over mobile communications standards.

"Although we do not believe this dispute will affect other patent litigation, it does reduce industry confidence in the integrity of Qualcomm's overall patent position," said the analysts.

Gartner noted that the Qualcomm/Broadcom spat is one of many intellectual property disputes that could disrupt businesses and delay the introduction of wireless technologies.

"We expect that governments will increasingly have to intervene and resolve disputes, and that manufacturers, operators and distributors will put increasing pressure on Qualcomm and Broadcom," said the advisory.

"The best solution is usually an out-of-court one, and Gartner expects the latest development will force both parties to come to an agreement within a few months as imports start to suffer."