From:PeterK moderated
UPDATE 1-U.S. upholds import ban on some cell phones
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Reuters U.S. Company News
5:15 p.m. 08/06/2007
WASHINGTON, Aug 6 (Reuters) - The Bush Administration said on Monday it was upholding an order by a federal trade agency that banned imports of some cellular telephones containing Qualcomm Inc (QCOM) chips.
"I have decided to permit the limited exclusion order and cease and desist order (the 'orders') that the USITC issued in its investigation," U.S. Trade Representative Susan Schwab said in a prepared statement.
The U.S. International Trade Commission's June 7 order had banned imports of cell phone models using Qualcomm chips that had been found to infringe a Broadcom Corp (BRCM) patent. The ban excluded phone models already being imported June 7.
Qualcomm had asked the administration to invalidate the decision by the ITC, which determines whether imports hurt U.S. companies.
The second and third biggest U.S. mobile service providers depend largely on phones with Qualcomm chips for their high- speed wireless services.
The No. 2 U.S. mobile service provider, Verizon Wireless had been supporting Qualcomm in its patent dispute against Broadcom. But on July 19, Verizon announced it would pay up to $200 million in licensing fees to Broadcom to avoid the ban.
"While we recognize legitimate concerns that certain market participants and others have expressed regarding the potential effects of these orders, we believe that steps are being taken to address those concerns," Schwab said.
As part of the administration's review, U.S. trade officials consulted closely with the Department of Homeland Security, which said it does not believe there were sufficient public safety risks to justify denying the exclusion order.
Broadcom's offer of royalty-free public licensing to state and local public safety organizations and its licensing agreements with two major wireless carriers were a factor in DHS's judgment, Schwab said.
"We also understand that other market participants are investigating the use of a non-infringing software work-around. We believe that such licensing agreements and work-arounds will address in large part the concerns raised about delay in 3G network deployment," Schwab said.
Verizon Wireless, owned by Verizon Communications (VZ) and Vodafone Group Plc, also withdrew its support for Qualcomm's request for a presidential veto of the ban.
Sprint Nextel Corp (S), the No. 3 U.S. mobile service provider, has said it is working with its suppliers to avoid any disruptions arising from the ban.
The technology patent in question extends battery life in phones when they are outside the range of their network.
The ban on new phone models with Qualcomm chips would also hurt mobile phone makers such as Samsung Electronics Co Ltd <005930.KS> and LG Electronics Inc <066570.KS>. (Reporting by Doug Palmer)
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