How Outgunned Broadcom Won a Major Cellphone Battle

By Jeffrey H. Birnbaum
Tuesday, September 11, 2007

The price of a cellphone might soon get higher because of a strange-but-true lobbying battle that took place over the past few months.

Without fanfare this summer, Broadcom, a small California maker of computer chips, bested the better-known and much larger chipmaker Qualcomm -- as well as the entire wireless telephone industry. Qualcomm and its deep-pocketed allies spent millions of dollars in lobbying fees. Broadcom paid a fraction of that.

Yet Broadcom persuaded the International Trade Commission in June to protect its cellphone patent from infringement by Qualcomm. And last month the U.S. trade representative upheld the commission's decision.

As a result, cellphone makers are scrambling to avoid a ban on the importation of the latest generation of wireless phones -- the remedy prescribed by the commission. Some are also ponying up hundreds of millions of dollars in licensing fees to Broadcom to pay for its patented technology -- a move that could end up boosting the cost of phones.

How did the small fry prevail? Hard work by a tight band of energetic K Street types is one reason. Another is the odd route that the dispute took. In this instance, regulators and bureaucrats decided the outcome, and all the money in the world sometimes cannot buy a result from them.

In 2005, Broadcom complained that Qualcomm was using one of its patents without permission. In simple terms, the technology allowed cellphones to "sleep," or use less battery power, when not in use.

Qualcomm denied the allegation, so Broadcom asked the International Trade Commission, an obscure independent agency in Washington, to step in. One of the peculiarities of the commission -- and maybe a reason that it was chosen as the arbiter -- is that its commissioners cannot be lobbied by government outsiders.

They can, however, be importuned by members of Congress. So Qualcomm hired what seemed like everyone in town to try to obtain letters from lawmakers backing its position. Its lobbyists included Covington &; Burling, Lent Scrivner & Roth, Meece Group, DC Navigators, Loeffler Group, Quinn Gillespie & Associates, and Brownstein Hyatt & Farber.

That's a lot. In addition, CTIA-the Wireless Association and such major wireless companies as Verizon Wireless and AT&T put their muscle behind Qualcomm's cause.

Broadcom, in contrast, took a minimalist approach. It retained a law firm, Cleary Gottlieb Steen & Hamilton; former commission chairwoman, Paula Stern; and a single lobbying firm, Clark & Weinstock, whose small team was led by Sandra Stuart. Stuart is a veteran congressional staffer and was the top congressional lobbyist for the Pentagon during the Clinton administration.

Stuart's team worked day and night to prevent the cast of thousands against it from persuading every senior lawmaker on Capitol Hill to write a letter for Qualcomm. It did a fairly good job and even persuaded a few congressmen to take its side. "It was really tough going for a long time; we knew it was a major uphill battle," Stuart said. "We worried about the massive amount of force that was aligned against us, but we felt that the policy was on our side."

She also contends that any cellphone price hikes or import restrictions, if there even are any, will be minor.

For its part, Qualcomm does not regret spending so much on what, so far, has turned out to be a losing venture. "Clearly we needed to take every possible step," said Jonas Neihardt, Qualcomm's vice president for federal government affairs.

Sometimes, though, tiny steps are enough.

What Are You Really Saying?

Presidential debates are great places to find both politicians and political activists. That's why interest groups, such as the one that advocates for "FairTax" (a kind of sales tax), tend to show up at them.

At the Republican debate in New Hampshire last week, an offbeat newcomer was also there -- well, in the sky overhead. Before the debate, a plane pulled a banner that read, "America's #1 Killer: What are you going to do about it?"

This was not a sly suggestion that the candidates were all sick. Rather, the coalition behind the ad, the Partnership to Fight Chronic Disease, was trying to get the candidates to talk about the importance of combating cancer, diabetes and heart disease as a way to reduce health-care costs.

One of the groups that helped launch the partnership was (surprise!) the Pharmaceutical Research and Manufacturers of America, better known as the drug lobby.

Retirements of the Week

Two fixtures of D.C.'s downtown scene have decided to move on.

Paul Hallisay is retiring as the director of government affairs at the Air Line Pilots Association after 30 years with the group. His replacement is Brendan Kenny, who has lobbied for the union for 22 years.

Also, Linda F. Golodner is retiring as president of the National Consumers League after 24 years with the organization, the nation's oldest consumer lobby.

Her successor is Sally Greenberg, formerly a senior attorney at Consumers Union. Greenberg said she wants to increase the organization's consumer and social activism, but in a cooperative way. "There are people who worry about me being an ogre," she said. "I don't want to come in and confirm their worst fears."

Hire of the Week

Want to know how fast lobbying is growing these days? Look no further than Mark Van de Water, the latest addition to the quickly expanding lobbying shop at the law firm Baker, Donelson, Bearman, Caldwell & Berkowitz.

The longtime Senate appropriations aide is the sixth lobbyist to be hired this year by the firm, which started 2007 with only five lobbyists. Besides Van de Water, the hiring spree has included former congresswoman Nancy Johnson (R-Conn.), a 12-term veteran of the House, and former Senate staffer J. Keith Kennedy, who, remarkably, doubles as managing director of the entire Washington office. (Lawyers usually look down their noses at the lobbyists in-house.)

Lobbying "is a growth business," said Linda H. Daschle, chairwoman of the firm's lobbying practice and the wife of former senator Thomas A. Daschle (D-S.D.). Demand is especially strong, she said, for experts in health care, homeland security and appropriations.

Please send e-mail tokstreet@washpost.com.