Verizon sidesteps Qualcomm ban

US cellco Verizon Wireless has ceased its attempts to overturn the recent ban on Qualcomm chips and has signed a licensing agreement with US chip shop Broadcom instead.

Verizon said it made the deal so it can continue to sell 3G handsets. Last month, the International Trade Commission (ITC) banned the import of new 3G phone models using chips made by the firm.

The ban came into effect after Qualcomm was previously found guilty of infringing three Broadcom patents related to cellular baseband chips.

Verizon had initially backed Qualcomm in a bid to get the ban overturned but it now looks like the company has sought out another route to ensure delivery of 3G devices.

Under the agreement, Verizon Wireless will make payments to Broadcom at a rate of $6 for each 1xEV-DO handset, PDA or data card sold, subject to a maximum payment of $40m per calendar quarter and a lifetime maximum payment of $200m.

The agreement provides Verizon a license to the six Broadcom patents currently being litigated between Broadcom and Qualcomm.

“As a result of the agreement, Verizon Wireless will also cease its efforts to overturn the ITC’s recent order banning Qualcomm chips and certain cell phones based on those chips from importation, and will withdraw Verizon Wireless’s motion to stay that same ITC remedy previously filed with the US Court of Appeals for the Federal Circuit,” the company said in a statement.

In a show of good faith, Qualcomm released a statement identifying the license agreement between Verizon and Broadcom as a positive development.

“The agreement…removes uncertainty for Verizon Wireless and its customers by ensuring that Verizon Wireless will be able to continue to sell wireless broadband products powered by Qualcomm’s chipsets and software. In addition, the announced economic terms are far less drastic than any terms previously demanded by Broadcom from Qualcomm,” the company said.

President Bush has designated US Trade Representative Susan Schwab to review the ITC action and make the decision on whether to allow the ITC order to stand or to disapprove it. A 60-day presidential review period of the ban ends on August 6.

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