Thursday, June 7, 2007

U.S. bans some cell phone imports in Qualcomm case

By Peter Kaplan and Sinead Carew

WASHINGTON/NEW YORK (Reuters) - A U.S. trade agency on Thursday banned imports of future advanced cell phone models using Qualcomm Inc. (QCOM.O: Quote, Profile , Research) chips, potentially hurting the country's biggest wireless services.

The International Trade Commission's ban, which is being appealed, exempts models already being sold. The ITC said the Qualcomm chips infringed a patent owned by Broadcom Corp. (BRCM.O: Quote, Profile , Research).

Qualcomm and Verizon Wireless, the second-biggest U.S. mobile service provider, said they planned to ask the Bush administration to invalidate the order and Qualcomm said it would seek an emergency stay from the U.S. Federal Circuit Court of Appeals, which specializes in patent cases.

Shares of Qualcomm rose as much as 2.4 percent after the news as some investors had feared an even tougher ban that would include existing as well as future phones.

Paul Jacobs, chief executive of Qualcomm, said the ITC had overstepped its authority with a ban he said would stop the sale of "tens of millions" of phones in the future.

"This remedy decision by the ITC was wrong," Jacobs said on a conference call with analysts. "While there is no short-term disruption to Qualcomm, this decision immediately affects third parties," he said, referring to consumers, service providers and phone manufacturers.

Qualcomm executives said they would look at ways to create designs that would avoid infringing the Broadcom patents but said this would take time as manufacturers and service providers would have to approve the changes.