US chip giant Qualcomm called the South Korean antitrust regulator’s move to fine it nearly $900 million for unfair business practices “an unprecedented and insupportable decision”.
The US firm claims its licensing practices, which were under investigation nearly two years, “have been in existence in South Korea and worldwide for decades and…the KFTC reviewed but did not question in a previous investigation of Qualcomm”.
The Korea Fair Trade Commission (KFTC) last week fined the company KRW1.03 trillion ($865 million) for abusing its dominant market position by linking modem sales with patent licensing deals. The penalty imposed is the largest in the KFTC’s history.
Qualcomm said that additional details of the regulator’s decision will not be available until the KFTC issues a written decision and order, which in prior cases has typically taken four to six months. Following receipt of the written order, it will file for an immediate stay of the corrective order and appeal the decision to the Seoul High Court.
In addition, it plans to appeal the amount of the fine and the method used to calculate it.
Qualcomm will be required to pay the fine within 60 days of the issuance of the order, which will be subject to possible adjustment or refund as part of the appeal process.
The KFTC said that despite requests by competing modem companies, Qualcomm refused to license, or imposed restrictions on the license for, standard essential patents (SEPs) necessary for the manufacture and sale of products.
The regulator said that by linking chipset supply with patent licensing agreements, Qualcomm “coerced the execution and performance of unfair licensing agreements by using its chipset supply as leverage, while circumventing FRAND commitments”.
It went on to say: “Qualcomm has provided handset companies with only comprehensive portfolio licences and coerced unilaterally determined royalty terms without conducting a procedure to calculate fair compensation, while coercing unfair agreements, e.g., demanding handset companies to license their patents for free.”
The KFTC said Samsung, LG, Apple, Intel, Nvidia, MediaTek, Huawei and Ericsson participated in its hearings.
The agency launched the investigation in February 2015 after complaints were filed against Qualcomm, accusing it of collecting high royalties from its Korean partners for using the firm’s standard essential patents.
Nearly two years ago Qualcomm agreed to a settlement with China’s National Development and Reform Commission (NDRC) after a long-running (and expensive) spat about its licensing practices and royalty charges.