Korea

• Pages: 543-578

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Chapter XVII

KOREA

A. Introduction

Korea, the world’s thirteenth largest economy, has been improving

its protection of intellectual property rights (IPR) to meet the demands of

foreign investors through various amendments to its laws and regulations

relating to IPR. Antitrust laws under the Korean Monopoly Regulation

and Fair Trade Act (MRFTA), on the other hand, protect competition and

the competitive process by preventing certain types of conduct that

threaten the free market.1 The complex interaction between antitrust and

intellectual property law arises out of the intersection of these basic

principles. Although the MRFTA does not limit legitimate exercise of

intellectual property rights,2 it regulates unjustifiable exercise of IPR that

restrains competition in technology markets or goods markets.3

1. See Monopoly Regulation and Fair Trade Act (MRFTA), Act No. 8631,

Aug. 3, 2007, art. 1 (stating that “the purpose of this Act is to promote

fair and free competition, to thereby encourage creative enterprising

activities, to protect consumers, and to strive for balanced development

of the national economy by preventing the abuse of market-dominant

positions of enterprises and the excessive concentration of economic

power, and by regulating improper concerted acts and unfair business

practices”).

2. Article 59 (Exercise of Intangible Property Rights) of the MRFTA

stipulates that this act shall not apply to any acts that are deemed to be

exercise of rights under the Copyright Act, the Patent Act, the Utility

Model Act, the Design Protection Act, or the Trademark Act.

3. The GUIDELINES FOR REVIEWING UNDUE EXERCISE OF INTELLECTUAL

PROPERTY RIGHTS (IPR GUIDELINES) promulgated by the Korea Fair

Trade Commission (KFTC) are intended to give a guidance as to the

antitrust enforcement policy in Korea with respect to the licensing of

intellectual property rights including patent, copyright, trademark, utility

model right, design right, and know-how. KOREA FAIR TRADE

COMMISSION,GUIDELINES FOR REVIEWING UNDUE EXERCISE OF

INTELLECTUAL PROPERTY RIGHTS (March 31, 2000), available at

http://eng.ftc.go.kr/files/static/Legal_

Authority/Review%20Guidelines%20on%20Undue%20Exercise%20of%

20Intellectual%20Property%20Rights.pdf. The IPR GUIDELINES sets

544 Antitrust Issues in International IP Licensing Transactions

B. Source and Basics of Korea’s Competition Law

Under the MRFTA, the Korea Fair Trade Commission (KFTC)

establishes and implements action plans to promote competition in the

markets where monopolies or oligopolies have existed for an extended

period of time.4 The KFTC also issues opinions to the chief officers of

government regulatory agencies as to the facilitation of competition or

other measures necessary to improve market structures.5

1. Improper Concerted Acts

Under Article 19 of the MRFTA, no enterprise should conspire with

other enterprises by contract, agreement, resolution, or any other means,

to jointly engage in activities that substantially restrain competition

(referred to as “improper concerted acts”).6 Improper concerted acts

include concerted acts that have the effect of substantially restricting

competition by (1) fixing, maintaining, or changing prices;

(2) determining terms and conditions for transactions of goods or

services, or the payment of prices thereof; (3) restricting production,

delivery, transportation, or transaction of goods or services; (4) limiting

the territory of trade or customers; (5) preventing or restricting the

establishment or extension of facilities or the installation of equipment

necessary for provision of goods or services; (6) restricting the types or

specifications of goods or services; (7) jointly carrying out and managing

the main parts of a business; (8) jointly deciding successful bidder,

successful auctioneer, bidding price, highest price or contract price, and

other matters prescribed by presidential decree; or (9) any other practice

that substantially restricts competition in a particular business area by

means of interfering with or restricting the activities or contents of

business.7

Improper concerted acts arise where two or more enterprises in

collaboration with each other commit any acts listed above in a manner

that restricts competition in a particular business area.8 The concept of

“improper concerted acts” is thus roughly comparable to Section 1 of the

forth detailed criteria for examination of the anticompetitive effect of the

exercise of IPR. Id.

4. MRFTA art. 3(1).

5. Id. art. 3(2).

6. Id. art. 19(1).

7. Id.

8. Id. art. 19(5).

Korea 545

Sherman Act in the United States and Article 81 of the Treaty

establishing the European Economic Community (EEC Treaty).

2. Abuse of Market-Dominant Positions

Under Article 3-2 of the MRFTA, a market-dominant enterprise is

prohibited from committing “abusive acts.” An abusive act is defined as

(1) an act unreasonably determining, maintaining, or changing the price

of commodities or services; (2) an act unreasonably controlling the sale

of commodities or provision of services; (3) an act unreasonably

interfering with the business activities of other enterprises; (4) an act

unreasonably impeding the participation of new competitors; and (5) an

act unfairly excluding competing enterprises, or an act that might

considerably harm the interests of consumers.9 An enterprise is deemed

to be in a market-dominant position if (1) the enterprise’s market share in

the relevant market is 50 percent or more; or (2) the total market share of

three (or fewer) enterprises (excluding the market share of enterprises

whose market share is 10 percent or less) is 75 percent or more.10 The

concept of “abuse of market-dominant position” is comparable to Section

2 of the Sherman Act in the United States and Article 82 of the EEC

Treaty.

3. Unfair Business Practices

Under Article 23 of the MRFTA, no enterprise may commit any act

that is likely to impede fair trade, or make its affiliates or other

enterprises perform “unfair business practices.”11 Unfair trade practices

are defined as: (1) unfairly refusing to deal with, or discriminating

against, a certain trading partner; (2) unfairly excluding competitors from

a market; (3) unfairly coercing or inducing customers of competitors to

deal with oneself; (4) unfairly taking advantage of a trading partner’s

inferior position in dealing with the partner; (5) trading with others under

terms and conditions that unfairly restrict or disrupt business activities of

other enterprise(s); (6) unfairly assisting a person or a company by

providing advanced payment, loans, manpower, immovable assets,

stocks and bonds, or intellectual property, or by providing substantially

9. Id. art. 3-2.

10. Id. art. 4.

11. Id. art. 23.