Summary
Verizon Communications Inc. (VZ) has entered into a license agreement with Broadcom Corporation that allows Verizon Wireless to continue importing and selling mobile devices impacted by a patent infringement case between Broadcom and Qualcomm. This agreement effectively resolves an International Trade Commission (ITC) exclusion order that had banned the sale of certain devices. Investors should note that Verizon Wireless will pay Broadcom a per-device fee, capped quarterly and overall, to secure a perpetual license to the disputed patents. The financial impact on Verizon Wireless is expected to be immaterial due to the payment limitations. This agreement allows Verizon Wireless to avoid further legal battles and ensure continued product availability for its customers, removing uncertainty surrounding the ITC's exclusion order and its potential disruption to sales.
Key Highlights
- 1Verizon Wireless secured a license agreement with Broadcom Corporation related to patent infringement issues.
- 2The agreement allows Verizon Wireless to continue selling mobile devices previously subject to an ITC exclusion order.
- 3Verizon Wireless will pay Broadcom $6.00 per 1xEV-DO handset, PDA, data card, or other wireless device sold after July 19, 2007.
- 4Payments to Broadcom are capped at $40 million per calendar quarter and a lifetime maximum of $200 million.
- 5Verizon Wireless obtains a perpetual license to six Broadcom patents in litigation between Broadcom and Qualcomm.
- 6Verizon does not anticipate a material impact on Verizon Wireless's annual financial results due to the payment caps.
- 7Verizon Wireless has halted efforts to overturn the ITC's exclusion order as a result of this agreement.