The US Court of Appeals for the Federal Circuit granted the stay on the grounds that it was unfair to punish the phone makers for Qualcomm’s alleged infringement on a Broadcom patent. The US International Trade Commission ruled in early June to ban the import of phones with Qualcomm 3G silicon that allegedly infringed on the patent. Qualcomm asked President George Bush to overturn the ruling, but with no success.

The appeals’ court ruled that seven Qualcomm carrier partners and customers could now import phones containing the banned chips. It was good news for AT&T, Deutsche Telekom’s T-Mobile, Kyocera, LG Electronics, Motorola, Samsung and Sanyo.

We are pleased with this ruling as the ban was not a suitable solution to the situation, said a Motorola spokesperson, who did not give any further comment on the matter. The company recently enlisted rival chipmaker Texas Instruments as a supplier for its newer model handset designs.

Sprint Nextel was not included in the stay, but the company is currently working with Qualcomm on a software workaround to the contested intellectual property. Verizon Wireless also was not included; it has earmarked as much as $200m to license the contested IP from Broadcom.

The latest ruling was not good news for Broadcom.

We are pleased that Qualcomm will not be permitted to continue its infringement of our patent while the appeal proceeds, either as to its original design or its purported redesign, said David Dull, Broadcom’s general counsel, in a statement. We look forward to an expedited process in the appeal, and believe that the stay will eventually be lifted for all parties.

Broadcom also is pursuing an antitrust case against Qualcomm, which it originally filed in mid-2005. Earlier this month, a US Court of Appeals reversed a lower court’s dismissal of the case. The appeals court found that Broadcom had adequately alleged that Qualcomm possessed monopoly power in the relevant market and that Qualcomm obtained and maintained its market power willfully, and not as a consequence of a superior product, business acumen, or historic accident.

The appeals’ court stay lasts only while the appeal against the ban is being processed.

Our View

The decision by the appellate court effectively renders the ITC’s ruling as toothless, at least for the time being. The stay is in effect while the ban makes its way through the courts, and that is likely to take years.