I have seen several Korean news reports, of which I obtained machine translations (Google Translate), on an announcement today by the Korea Fair Trade Commission, South Korea's antitrust authority, that Apple's complaint against Samsung over its pursuit of injunctive relief over FRAND-pledged standard-essential patents (SEPs) was rejected. The KFTC found Samsung's conduct to be above board. One of the reports quoted an unnamed Apple official who expressed disappointment.
The KFTC had been investigating the matter since the summer of 2012 further to a complaint lodged by Apple in April 2012. The regulatory agency has now determined that Samsung is "not liable" for a violation of Korean antitrust law, called the Monopoly Regulation and Fair Trade law.
This wholesale acquittal contrasts with the state of FRAND antitrust matters in other jurisdictions. While I recently raised the question of whether regulators in the U.S. and EU are taking a soft line on SEP issues and answered it with "Yes!" as far as the DoJ's closing of its investigation of Samsung is concerned (because the issue is not moot at all, given that Samsung is still pursuing a U.S. import ban, through an appeal, and wants an injunction over the two SEPs it's going to assert at next month's California trial), the DoJ did at least say it would continue to monitor Samsung's behavior and reiterated concerns over SEP abuse. And the European Commission indicated in December that Samsung needs to make significant improvements to its proposal in order to reach a settlement. I'd like EU and U.S. regulators to look into some of the FRAND-related issues the Competition Commission of India has decided to investigate, but at least they haven't concluded Samsung's pursuit of SEP-based injunctions was lawful.
I do, however, attribute the outcome of the Korean antitrust case in no small part to the fact that regulators in the West failed to make much sharper decisions. The KFTC ruling appears to be far more SEP holder-friendly than anything the DoJ, FTC or European Commission ever indicated in this context, but unlike in August, when I wondered whether South Korea was on the verge of becoming a "FRAND rogue state", all I can say now is that basically the Korean competition regulators have taken the worst parts of certain Western rulings, positions and almost-accepted settlement proposals on SEP injunction issues, have taken those worst parts to a new level, and added at least one absurdity of their own to the mix.
The unprecedented absurdity I mean is that the KFTC determined Samsung did not have "essential facility" type monopoly power based on its SEPs because "more than 50 companies hold over 15,000 SEPs relating to 3G wireless communication (UMTS/WCDMA) technology", citing the Fairfield Resources International 2009 Report and noting that this constitutes a difference from case in which "only one essential facility exists". This makes no sense at all because any one SEP (if truly essential to the standard, of course) can force someone out of the market. As a Motorola expert witness once put it, "it only takes one bullet to kill". If Apple didn't need a license to Samsung's 3G SEPs on FRAND terms because it could, as it has, secure a license to, for example, Ericsson's SEPs reading on the same standard, then Samsung wouldn't have essential-facility power. But that's simply not the case. I don't think this reasoning is going to be adopted by any antitrust regulator anywhere else in the world anytime soon. Other regulators may well agree that "essential facility" theories aren't the best vehicle to address SEP abuse, but the existence of non-interchangeable SEPs held by other companies is not a reasonable basis to let SEP holders go ahead and pursue injunctive relief.
Another highly perplexing part of the KFTC's holdings is that Samsung's behavior is, in no small part, excused with the fact that "by first filing a patent infringement lawsuit", Apple was responsible for the overall "negotiation atmosphere" being determined by the characteristics of patent infringement litigation. In other words, Apple drew first blood. But Apple sued Samsung only over non-SEPs. I have explained on various occasions that and why SEP and non-SEP issues must be kept separate. To be fair, however, the KFTC was not the first government agency in the world to conflate those issues. Previously, that's what a majority of the ITC did as well, with only Commissioner Dean Pinkert dissenting (on a very well-reasoned basis). If the ITC as a whole had adopted the Pinkert stance on the issue, the Presidential veto of the U.S. import ban Samsung won last year would never have been necessary, and the KFTC would not have been encouraged to excuse SEP abuse with non-SEP enforcement. Non-SEPs can be worked around; true SEPs cannot. Non-SEPs are typically unencumbered; SEPs are subject to FRAND licensing commitments. But after the ITC majority failed to make that distinction, it's hard to blame the KFTC for merely taking SEP and non-SEP conflation to a new level. And the unfortunate course of events in the U.S. may very well have contributed to a political climate in which Korean officials weren't overly sympathetic to Apple's antitrust complaint against Samsung.
There's another reason not to describe Korea as a "FRAND rogue state", despite the parts of the KFTC's decision that I fundamentally disagree with. Korean media appear to be well aware of the fact that this decision is different from the conclusions reached elsewhere in the world on these issues, and at least one Korean law professor (who is also licensed as a U.S. attorney-at-law and patent attorney) said that while Samsung is entitled to royalties on its SEPs, seeking sales bans over them is "problematic". In the long run I believe the KFTC's conclusions won't benefit Korean companies and consumers either, even if this may be viewed as a win for Samsung in the short term.
In other FRAND news today, Reuters reports that Huawei has withdrawn its EU antitrust complaint against InterDigital. The European Commission had not launched formal investigations anyway, and won't do so now following the withdrawal of the complaint.
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