South Korea's Fair Trade Commission just became the latest competition regulator to show concern about the way standard-essential patents are being enforced. The Asian country's antitrust authority decided to look into Apple's complaint over Samsung's SEP enforcement. Previously, the European Commission launched an investigation of Samsung's assertions of such patents against Apple, and two investigations based on Apple's and Microsoft's complaint over Motorola's SEP enforcement. And in connection with Google's acquisition of Motorola, the European Commission, the United States Department of Justice and the Chinese Ministry of Commerce (MOFCOM) were aware of Motorola's SEP enforcement. While all these regulators ultimately cleared the deal, they signaled that they would not take subsequent SEP abuse lightly.
The Korean investigation is timely. Less than two weeks ago, a Korean court granted Samsung two SEP-based injunctions against older Apple products (those injunctions will likely be stayed for the duration of an appeal). I applaud the Fair Trade Commission for its courage to take on a corporate group that contributes 15% (by some counts even 20%) of the country's Gross Domestic Product and has enormous political clout. The Fair Trade Commission's courageous move shows that the Korean government is not prepared to turn its country into a FRAND rogue state only because it may suit Samsung's short-term tactical needs in a global patent spat.
If the Fair Trade Commission ensures FRAND access to SEPs and takes action against hold-up and the pursuit of injunctive relief, it does Korean consumers a service. Koreans should continue to be able to buy Apple's products. From a longer-term perspective, looking beyond the Apple-Samsung spat and some of LG's SEP monetization efforts, preventing SEP abuse would also be in Korea's national economic interest. While Samsung and LG hold many SEPs, they also sell large quantities of high-quality products to the world -- products that implement numerous standards. If Samsung and LG could use SEPs in their own country to block competitors who don't accede to their demands, it might appear useful in some ways, but on the bottom line it would hurt Korea's largest companies if the same happened to them in other jurisdictions. Simply put, Samsung and LG are excellent companies that can do well on a level playing field.
At this stage, it's impossible to know what effects, if any, this investigation will have on Samsung's Korean SEP enforcement against Apple. In Europe, Samsung is continuing to pursue injunctive relief over SEPs despite an ongoing European Commission investigation. This month there will be two Mannheim trials over Samsung v. Apple SEP lawsuits. In light of this, I believe the Korean investigation won't result in a near-term withdrawal of Samsung's Korean SEP lawsuits. But Samsung should read the writing on the wall. At some point, U.S. regulators might also look into this matter (for example, after a preliminary ITC ruling on Samsung's ITC complaint against Apple, which is scheduled for the end of next week). With investigations ongoing in three continents and regulators likely working together to some degree, there could be a point at which Samsung risks being fined on two or three continents.
On a related note, the Korea Times today reports on an antitrust conference organized by the Fair Trade Commission, the Seoul International Competition Forum (SICF), and quotes John R. Read, chief of the antitrust division at the U.S. Department of Justice (DOJ), who stressed Samsung's importance and said he "hope[s] Samsung Electronics can sell its products in the United States despite the [recent California jury] verdict".
The governments of the United States and South Korea are traditional close allies. The fact that the Fair Trade Commission investigates its national champion's conduct while a U.S. official hopes that Samsung will continue to sell its products in the U.S. shows that regulators would like to make their contribution to a level playing field. But the devil is in the details, and just like launching an investigation doesn't mean that any real change will be brought about or that Samsung will have to do go down from its 2.4% royalty demand, a general statement that Samsung should be allowed to keep selling its products doesn't answer the question of whether an injunction that Samsung can work around and design around should or should not be granted. There's plenty of room for interpretation, and it will take time to sort out all of these issues.
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