"We are pleased that the Court of Appeals recognized the undeserved harm to parties who were not named in the lawsuit," said Qualcomm senior vice president and legal counsel Alex H. Rogers. "Our customers will continue to be able to introduce new products into the U.S. marketplace during the appeals process."

The Court of Appeals issued no findings questioning the validity of Broadcom's patent or its infringement by Qualcomm, which means that Qualcomm must continue to seek a reversal of the ITC's underlying infringement finding.

No Frowns for the Holidays

The news was a huge relief to Kyocera, LG Electronics, Motorola, Samsung, and Sanyo, which previously had seen their handset plans for this year's holiday season put on hold. "We are pleased with this ruling as the ban was not a suitable solution to the situation," said Motorola spokesperson Jennifer Erickson.

The manufacturers, together with wireless carriers AT&T and T-Mobile, had argued before the court that they were merely "downstream" users and that the ITC had overreached its authority in blocking imports by companies other than Qualcomm given that Broadcom had only filed its complaint against its rival chipmaker.

In granting the stay, the Federal Circuit agreed that the third parties had demonstrated "a substantial case on the merits and that the harm factors weigh in their favor."

Since the appeals process could take a year or longer to reach closure, the handset providers need no longer worry that the ban will impact their sales numbers during this year's holiday season. It also takes the pressure off the wireless carriers to follow Verizon's lead and reach a separate settlement with Broadcom.

"We commend Judge Mayer," said AT&T spokesperson Marty Richter. "As we've said, the ITC's order would penalize consumers, handset manufacturers and wireless carriers -- none of whom have committed any wrongdoing or are even involved in the patent dispute."

The Maneuvers Ahead

For its part, Broadcom noted that the Appeals Court's ruling this week does not affect the ITC's Cease and Desist Order, which bars Qualcomm itself from importing the infringing baseband chips or engaging in certain activities related to the infringing chips.

Broadcom claims the limited scope of the stay will affect Qualcomm's ability to provide design support to its handset customers, but Qualcomm says that it does not import the offending chips directly. Moreover, the stay will give Qualcomm additional time to bring its baseband chipsets into compliance with the ITC's controversial ruling on June 7.

"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 Broadcom's senior vice president and general counsel David A. Dull. "We look forward to an expedited process in the appeal, and believe that the stay will eventually be lifted for all parties."

Last month, Qualcomm said it had been working closely with handset makers on a software solution that would replace the current technology found to infringe on Broadcom's patent. Although Qualcomm also acknowledged that any workaround might itself be "subject to challenges by Broadcom," a switch in technology would likely prolong the legal battle between the two rivals.