03 January 2017
Reporter: Barney Dixon

Qualcomm fined $853 million in South Korea

Qualcomm has been hit with a fine of KRW 1.03 trillion ($853.4 million) by the Korea Fair Trade Commission (KFTC) for violating anti-trust laws, the largest ever handed to an individual company.

The KFTC imposed the fine, along with sanctions on the company, in late December, following an investigation into Qualcomm’s alleged abuse of standard essential patents for mobile communications.

It found that Qualcomm had refused or restricted the licensing of mobile communication patents that are essential in manufacturing and selling chipsets.

The KFTC said Qualcomm had coerced mobile phone makers into signing “unfair licence agreements by linking the chipset supply with patent licence contracts, using its market position as a leveraging tool in its negotiations and circumventing fair, reasonable and non-discriminatory (FRAND) commitments”

Qualcomm responded to the decision, arguing that it lacks a coherent theory of anti-trust law violations.

The decision “lacks any evidence of harm to competition, which is robust among chip and handset suppliers in part because Qualcomm’s business model promotes competition”, and that the fine is “insupportable and not reasonably related to the size of the Korean market”.

Don Rosenberg, executive vice president and general counsel at Qualcomm, said: “Qualcomm strongly believes that the KFTC findings are inconsistent with the facts, disregard the economic realities of the marketplace and misapply fundamental tenets of competition law.”

He added: “Importantly, this decision does not take issue with the value of Qualcomm’s patent portfolio.”

“Qualcomm’s enormous R&D investments in fundamental mobile technologies and its broad-based licensing of those technologies to mobile phone suppliers and others have facilitated the explosive growth of the mobile communications industry in Korea and worldwide, brought immense benefits to consumers and fostered competition at all levels of the mobile ecosystem.”

Commenting on the decision, the App Association, which represents more than 5,000 app companies, said it “applauds the KFTC’s decision in this matter, and looks forward to analysing the details of its corrective order that will contribute to growing global precedent upholding the purpose and meaning of FRAND obligations”.

It said: “FRAND abuse is an anticompetitive danger that poses a serious threat to the future of mobile computing and the ‘internet of things’.”

This comes amid other actions taken against Qualcomm last year, including a $975 million anti-trust fine levied against the company for charging royalties on standard essential patents.

The Korea Advanced Institute of Science and Technology (KAIST) brought a patent infringement action against Qualcomm, accusing the company of infringing a patent relating to its computer chip technology. This lawsuit is not linked to standard essential patents.

The university said that Qualcomm had used patented planar transistor technology in collaboration with Samsung and reaped “billions of dollars in chip and smartphone revenues”.

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