Qualcomm chip ban appeal rejected

A US appeals court has rejected an appeal by troubled niche chip maker Qualcomm to overturn a trading ban on its products.

The judge also criticised the company, calling its effort to overturn an order by a federal trade agency that banned imports of some mobile phone containing Qualcomm chips 'premature' and highlighting the chaotic way in which the company was pursuing its legal challenge.

The US Court of Appeals for the Federal Circuit said it lacked jurisdiction over an order by the US International Trade Commission (ITC) because Qualcomm has already asked the Bush government to invalidate the decision.

"An ITC determination does not become final for purposes of judicial review until the president has either approved of the determination or failed to disapprove within 60 days," the court said.

The Bush administration has until 6 August to review the ITC's 7 June order, which banned imports of future advanced cell phone models using Qualcomm chips but exempted phone models that were already being imported on 7 June.

The ITC, which determines whether imports injure US companies, found that Qualcomm's chips infringe on a patent owned by US rival Broadcom.

Qualcomm spokeswoman Emily Gin Kilpatrick said the ruling was based on a procedural issue. Qualcomm plans to go back to court and renew its stay request if the Bush administration does not veto the ban, she said.

US mobile service provider Verizon Wireless, which uses Qualcomm's chips in its phones, had supported Qualcomm in its patent dispute against Broadcom. But on Thursday, Verizon Wireless agreed to pay up to $200 million in licensing fees to Broadcom to avoid the ITC ban on imports. Verizon Wireless is half-owned by Vodafone.

Stifel Nicolaus analyst Blair Levin said in a note to clients that the Verizon defection reduces Qualcomm's chances of a presidential veto to 10 per cent to 20 per cent from his previous view that there was a 60 per cent to 70 per cent chance of a veto.

The ban on new phone models with Qualcomm chips would also hurt Sprint Nextel, the third largest US mobile service provider, and mobile phone makers such as Samsung and LG.

"If Broadcom strikes another carrier deal before 6 August, particularly if it is with Sprint Nextel, we would view the likelihood (of a veto) as close to zero," Levin said.

The Broadcom patent at issue covers technology that extends battery life in phones when they are outside network range.

(Additional reporting by Sinead Carew)

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