http://www.usitc.gov/ext_relations/news_release/2007/er0607ee1.htm
June 7, 2007
News Release 07-062
Inv. No. 337-TA-543
Contact: Peg O'Laughlin, 202-205-1819
ITC ANNOUNCES REMEDY IN BROADCOM/QUALCOMM INVESTIGATION
The U.S. International Trade Commission ("ITC" or "Commission") today
announced the remedial orders it will issue in connection with its
section 337 investigation concerning Baseband Processor Chips and
Chipsets, Transmitter and Receiver (Radio) Chips, Power Control Chips,
and Products Containing Same, Including Cellular Telephone Handsets
(337-TA-543).
The chips and chipsets at issue are used in handheld wireless
communications devices, including cellular telephone handsets, that
are capable of operating on so-called third-generation ("3G") cellular
telephone networks, i.e., EV-DO ("Evolution-Data Optimized") and WCDMA
("Wideband Code Division Multiple Access") networks such as those
operated by Verizon, Sprint, and A T&T.
The Commission previously determined that certain Qualcomm chips and
chipsets were imported in violation of U.S. law because they infringe
a U.S. patent held by Broadcom; the patent relates to mobile device
capabilities and power management. Under section 337, which is
designed to protect and enforce U.S. intellectual property rights, the
Commission must determine the appropriate remedy to address this
violation.
Vice Chairman Shara L. Aranoff, Commissioner Deanna Tanner Okun,
Commissioner Charlotte R. Lane, and Commissioner Irving A. Williamson
voted in favor of the remedial orders. They provide their supporting
analysis in two separate opinions. Chairman Daniel R. Pearson and
Commissioner Dean A. Pinkert voted for a more limited form of
relief. The Commission's written opinions will be made public after
consultation with the parties to ensure the removal of confidential
business information.
The Commission is issuing a limited exclusion order that bars the
importation of Qualcomm's infringing chips and chipsets and circuit
board modules or carriers containing them. In addition, the exclusion
order bars the importation of certain handheld wireless
communications devices, such as cellular telephone handsets and
personal digital assistants ("PDAs"), that contain Qualcomm's
infringing chips and chipsets. The exclusion order does not apply to
handheld wireless communications devices that are of the same models
as handheld wireless communications devices that were being imported
for sale to the general public on or before the date of the order,
June 7, 2007. However, the order does bar the importation of new
models of handheld wireless communications devices that contain
Qualcomm's infringing chips and chipsets. Thus, the order
"grandfathers" models of handheld wireless communications devices
being imported into the United States for sale to the general public
on or before June 7, 2007.
The Commission is also issuing a cease and desist order that prevents
Qualcomm from engaging in certain activities within the United States
related to the infringing chips.
The Commission reached its decision after careful consideration of the
appropriateness of an order excluding from importation the "downstream
products" that is, handheld wireless communications devices
incorporating the infringing chips. The Commission found that an order
excluding all downstream products would impose great burdens on third
parties, given the limited availability of alternative downstream
products not containing the infringing chips. However, as the
infringing chips are not imported in significant quantities outside of
downstream products, the Commission also found that an exclusion order
covering only the chips and chipsets, and not downstream products,
would afford little or no relief to the patent holder, Broadcom. The
Commission determined that barring importation of downstream products,
with an exemption for certain previously imported models, will
substantially reduce the burdens imposed on third parties while
affording meaningful relief to the patent holder.
The Commission found that, while exclusion of all downstream products
could adversely affect the public interest, particularly the public
health and welfare, competitive conditions in the U.S. economy, and
U.S. consumers, the exemption for previously imported models
sufficiently ameliorates this impact such that the orders should be
issued.
The dissenting commissioners, Chairman Pearson and Commissioner
Pinkert, determined that the appropriate remedy in this investigation
is an exclusion order that would bar the importation of the infringing
chips, and a cease and desist order that would bar the testing of the
infringing chips, including chips that are incorporated into cellular
telephone handsets. Chairman Pearson and Commissioner Pinkert
determined that exclusion of all downstream products containing the
infringing chips would adversely affect the public interest. Further,
they declined to endorse the majority's order that "grandfathers"
currently imported models of handheld wireless communications devices.
Chairman Pearson determined that an order exempting previously
imported and held wireless communications devices from exclusion would
still adversely affect the public interest. Commissioner Pinkert
determined, with regard to such an approach, that the Commission's
record was insufficient to permit him to determine whether it was
appropriate. Chairman Pearson and Commissioner Pinkert believe that
their recommended order would provide appropriate and effective relief
because it would place the direct burden of compliance on the
infringing party rather than on third parties. It also would be easier
to administer.
ITC remedial orders in section 337 investigations are effective when
issued and become final 60 days after issuance unless disapproved for
policy reasons by the U.S. Trade Representative.
Section 337 of the Tariff Act of 1930, as amended, authorizes the
Commission to investigate alleged infringement of U.S. patents and
trademarks by imported articles. If the Commission finds infringement,
then it must order that the infringing articles be excluded from
importation, unless, after considering the effect of the exclusion
order on statutory public interest factors, it finds that the articles
should not be excluded.
Background on this investigation:
On June 21, 2005, the Commission instituted an investigation under
section 337 of the Tariff Act of 1930, 19 U.S.C. =15 1337, based on a
complaint filed by Broadcom Corporation of Irvine, California
("Broadcom"), alleging a violation of section 337 in the importation,
sale for importation, and sale within the United States after
importation of certain baseband processor chips and chipsets,
transmitter and receiver (radio) chips, power control chips, and
products containing same, including cellular telephone handsets, by
reason of infringement of certain claims of five U.S. patents (70
Fed. Reg. 35707 (June 21, 2005)). The complainant named Qualcomm
Incorporated of San Diego, California ("Qualcomm") as the only
respondent.
On October 19, 2006, the presiding administrative law judge ("ALJ"),
Judge Charles E. Bullock, issued an Initial Determination ("ID")
finding a violation of section 337 with respect to U.S. Patent
No. 6,714,983. The ALJ also issued a Recommended Determination ("RD")
on Remedy and Bond, in which he recommended a limited exclusion order
barring import of Qualcomm's baseband processor chips. On December 8,
2006, the Commission issued a notice of its decision to review and
upon review to modify in part the ALJ's final ID. The modification
made by the Commission did not change the finding of violation. The
Commission also requested the parties to the investigation, interested
government agencies, and any other interested= persons to file written
submissions on the issues of remedy, the public= interest, and
bonding.
On January 25, 2007, respondent Qualcomm moved, inter alia, for oral
argument and a hearing on the issues of remedy and the public
interest. In view of the impact that an exclusion order covering
downstream products might have on the public interest, the Commission
held a public hearing on the issues of remedy and the public interest
on March 21-22, 2007.
The Commission announced its remedial orders on June 7, 2007. For
further information, see the Commission's Federal Register notice
dated June 7, 2007, which is available on the ITC web site.
Monty Solomon (monty@roscom.com)