The Competition Law Regulation of Standard Essential Patents in South Korea

Published date01 September 2017
Date01 September 2017
The Competition Law Regulation
of Standard Essential Patents
in South Korea
Gene-Oh Kim*, Dave B. Koo**, and Kyung Yul Lee***
South Korea is squarely involved in the global debates regarding the intersection between standard
essential patents (SEPs) and competition law, as it is home to an active competition agency and
major technology firms such as Samsung and LG that have rapidly advanced from being almost pure
implementers/licensees to simultaneously becoming innovators/licensors in the information tech-
nology sector. The landmark case between Samsung and Apple was a major milestone in terms of
the application of competition law to the exercise of patent rights by an SEP holder, in particular
whether a filing of an injunction claim based on an SEP violated the law as an abuse of intellectual
property rights. The Korea Fair Trade Commission has also shown substantial interest and activity
in this area, as represented by its recent revisions of its intellectual property rights related
guidelines, and with the Commission’s latest decision at the end of 2016 against Qualcomm, the
to new issues and dimensions.
standard essential patent, intellectual property, FRAND, KFTC, Qualcomm, competition, royalty,
exploitative abuse, injunctive relief
I. Introduction
A. Standard Essential Patents and the Competition Law Enforcement Regime in South Korea
The competition law implications of standard essential patents (SEPs) and the commitments given by
SEP holders to standard-setting organizations (SSOs) to license their SEPs on fair, reasonable and non-
discriminatory (so-called FRAND) terms is an area that continues to be of considerable controversy
worldwide. The main battleground for these issues has been the information technology and
*Antitrust and Competition and Mergers & Acquisitions, Kim & Chang, Seoul, Korea
**Litigation, Antitrust & Competition, and Intellectual Property, Kim & Chang, Seoul, Korea
***Antitrust and Competition Practice Group, Kim & Chang, Seoul, Korea
Corresponding Author:
Gene-Oh Kim, Antitrust and Competition and Mergers & Acquisitions, Kim & Chang, Seoul, 03170, Korea.
The Antitrust Bulletin
2017, Vol. 62(3) 465-482
ªThe Author(s) 2017
Reprints and permission:
DOI: 10.1177/0003603X17718680
telecommunications industries, where standard-setting activity has been the most active, of which the
most high-profile example so far was the so-called smartphone patent warsbetween various smart-
phone manufacturers and technology firms.
South Korea has also been intimately involved in these debates due to a combination of an active
competition agency, the Korea Fair Trade Commission (KFTC), and being home to major industrial
players involved at multiple levels of the telecommunications technology value chain. While the recent
smartphone patent wars have led to the formation of a nascent consensus on some of the basic
questions raised by SEPs, many other issues are still very contentious, and Korea appears to have
recently reinserted itself squarely in the middle of the ongoing debate with the KFTCs recent
announcement of its decision in its second major investigation of Qualcomm Incorporated and its
affiliates (Qualcomm), initiated in August 2014 (Qualcomm 2).
The KFTC as the primary competition law enforcement agency in Korea is responsible for over-
seeing and enforcing a broad spectrum of laws and regulations encompassing not only competition law
and fair trade, but also consumer protect ion, franchising, e-commerce, corpo rate governance and
disclosure, distribution, labeling and advertising, subcontracting relations, contracts of adhesion, multi-
level marketing, and more. The key legislation, however, is the Monopoly Regulation and Fair Trade
Act (MRFTA), which was first enacted as of December 31, 1980, came into force as of April 1, 1981,
and was most recently amended as of April 18, 2017.
Together with the rapid technological advancement of the Korean economy and Korean firms
engagement with and integration into the global economy, the KFTC has shown a willingness to take
on contentious antitrust issues against some of the largest multinationals in the world with its inves-
tigations against companies such as Microsoft, Intel, Qualcomm, Google, Oracle, and Apple (to name
just a few) and in the process has acquired a reputation as an active, even aggressive enforcer. In
particular, the KFTC has recently begun to focus on the possibility that certain unfair exercise of
intellectual property rights (IPR) could constitute a violation of the MRFTA and that interest has
encompassed the exercise of SEPs.
An important aspect of the MRFTA that cannot be overlooked in the context of IPR abuse is the
MRFTAs recognition of exploitative, in addition to exclusionary, harm as a competitive concern.
While the KFTC has been reluctant to directly apply the MRFTAsprice abuseprovisions and
increasingly tends to focus on exclusionary harm in its enforcement priorities, the historical acceptance
of exploitative harm as a competitive concern in Korea may nevertheless influence the KFTCs
approach to alleged abusive conduct by holders of patents and SEPs, including alleged breaches of
FRAND, which has brought the dimension of exploitative harm into the debate (in the form of the
theory of patent holdup
) even in jurisdictions such as the U.S.
1. SEPs burst into the South Korean public consciousness with a U.S. jurys award of 1.049 billion U.S. dollars to Apple Inc.
(Apple) on August 24, 2012, in its patent infringement case against Samsung Electronics Co., Ltd. (Samsung) and two of its
U.S. affiliates, and Samsungs subsequent assertion of its telecommunications-related SEPs against Apple in worldwide
2. Dokjeomgyujemitgongjeonggeoraeaegwanhanbeobryul [Monopoly Regulation and Fair Trade Act], Act. No. 14813, April
18, 2017 (S. Kor.) (hereinafter MRFTA).
3. For example, the KFTCs most recent Annual Workplan for 2017 states that it will closely review representative abusive
conduct through the acquisition of standard technologies such as unfair injunction claims in breach of FRAND commitments,
tying of services and products not directly related to standard technology, etc. that leads to exclusion of competitors or
lessening of R&D innovation competition. See Press Release, Korea Fair Trade Commission, 2017 nyeongongjeong
wieopmoogyehwek [2017 Korea Fair Trade Commission Work Plan] (Jan. 5, 2017),
4. Mark A. Lemley& Carl Shapiro, Patent Holdup and Royalty Stacking,85T
EX.L.REV. 1991 (2007).
466 The Antitrust Bulletin 62(3)

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