ITC Flexes Its Muscle In Cell Phone Case; Agency Can Offer IP Rightsholders Broad Relief Against Infringement

Considering a new cell phone or iPhone alternative? Your choices will be limited by the U.S. International Trade Commission's ("ITC") recent order banning new models of next-generation cell phones from entering the United States. The ITC's order has highlighted the power of this relatively obscure federal agency, thrusting it into the limelight and sending the cellular telephone industry scrambling to react.

An Introduction to the ITC

Established in 1930 to protect business interests in the United States against unfair competition from imported foreign goods, the ITC can investigate infringement of American intellectual property rights in response to complaints brought by rightsholders. ITC investigations are similar to infringement cases in federal court but typically proceed to trial much more quickly. After trial, an administrative law judge ("ALJ") renders an initial decision, which can be reviewed by the six commissioners who preside over the ITC. A notable difference between such investigations and federal court cases is the available relief. While a court can award monetary damages and enjoin infringers, the ITC is empowered to issue orders to exclude products from entering the United States, enforced by the U.S. Customs Service at the border, as well as orders to cease and desist from engaging in domestic activities with those products.

The Cell Phone Investigation

At patentholder Broadcom's request, the ITC instituted an investigation of various Qualcomm chips for possible infringement of five patents. In the Matter of Certain Baseband Processor Chips and Chipsets, Transmitter and Receiver (Radio) Chips, Power Control Chips, and Products Containing Same, Including Cellular Telephone Handsets, Inv. No. 337-TA-543. Recognizing the investigation's importance, many phone manufacturers and network providers intervened. The presiding ALJ found infringement of one patent, which covers power-saving features implemented in cell phones designed for next-generation "3G" networks operated (or soon to be operated) by the major networks.

The ALJ recommended that Qualcomm's chips be excluded from entering the United States but declined to recommend exclusion of cell phones containing those chips. Since the infringing chips were not imported in significant quantities outside of the phones, it was questionable whether this remedy would provide meaningful relief to Broadcom.

On June 7, 2007, the full Commission modified the ALJ's recommended...