South Korea's competition watchdog, the Korea Fair Trade Commission (KFTC), has just imposed a $853 million fine on Qualcomm for "monpolistic" practices involving its patent dealings. In particular, the antitrust agency stated that Qualcomm "has violated its agreement to license patents on fair, reasonable and non-discriminatory (FRAND) terms."
Qualcomm can and will appeal this decision, but the mobile device industry at large is keeping its fingers crossed that Korea's top court will affirm the KFTC ruling. The fact that Qualcomm filed an action in the U.S. in order to get access to information provided by Apple, Samsung and others to Korea's competition authority is interesting. It's hard to imagine that those companies would have told the KFTC "we're OK with what Qualcomm is doing and we're happy to pay even more going forward."
ACT | The App Association (which I'm not a member of, though I am an app developer), a tech industry group headquartered in Washington, DC, has just sent out the following statement that applauds the Korean competition enforcers:
"The Korea Fair Trade Commission (KFTC) has, after an extensive investigation, decided to significantly fine, and impose a corrective order on, Qualcomm Incorporated for systematically violating the commitments the company made to license its standards essential patents under fair, reasonable and non-discriminatory (FRAND) terms. FRAND abuse is an anticompetitive danger that poses a serious threat to the future of mobile computing and the Internet of Things.Curbing the abuses the KFTC is addressing is an issue we are passionate about. That is why we launched All Things FRAND, an effort committed to ensuring a balance between patent licensor and licensee that FRAND commitments safeguard. And while FRAND promises are important, they are meaningless – and undermine innovation, particularly for small businesses – when ignored during subsequent licensing negotiations. ACT | The App Association applauds the KFTC's decision in this matter, and looks forward to analyzing the details of its corrective order that will contribute to growing global precedent upholding the purpose and meaning of FRAND obligations."
I wish to point out that ACT is generally very IPR owner-friendly, but when it comes to FRAND licensing of standard-essential patents, its positions are pretty consistent with mine. An organization that takes similar positions on FRAND (and of which Google is a member) is the Brussels-based Fair Standards Alliance. Presumably the reason the FSA hasn't spoken out on the Korean ruling yet is simply that people in Brussels tend to be on vacation this week (to a far greater extent than in the U.S.).
Many years ago, the European Commission was taking a look at Qualcomm's practices but failed to take decisive action. Qualcomm currently does face an EU antitrust issue but with a somewhat different focus than the Korean case. I think the Korean regulator has the right set of priorities; maybe the EU Commission will bring additional charges, as it did against Google (more than once). I would also like to see some antitrust inquiry into Qualcomm's practices by the FTC or DoJ under the incoming Trump Administration. President-elect Trump highlighted the uniqueness of America's top innovators at a recent meeting with tech industry CEOs, and I'm optimistic he and his staff will be more sympathetic to the concerns of the likes of Apple, Google and Amazon than to those seeking to extract undue leverage from standard-essential patents.
If anyone would like to provide me with information on Qualcomm's practices and antitrust complaints or cases anywhere in the world, please get in touch via my contact form. I'm very interested in finding out more about this and I'll try to draw more attention to major SEP issues involving Qualcomm or anyone else.
[Update] A reader has kindly pointed me to an unofficial translation (apparently created by Qualcomm itself) of the KFTC press release, which is a highly informative document that warrants further discussion here at a later stage. [/Update]
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