Republic of Korea’s Highest Court Upholds Landmark KFTC Corrective Order in Support of FRAND

Last month, the Supreme Court of Korea, the Republic of Korea’s highest court, issued an important ruling that will have a wide impact on standard essential patents (SEPs) and fair, reasonable, and non-discriminatory (FRAND) licensing practices. In December 2016, the Korea Fair Trade Commission (KFTC) issued a Corrective Order against Qualcomm, fining them $951 million for anti-competitive behavior, including the abuse of FRAND commitments, and requiring them to change their licensing practices in the future. Qualcomm appealed the KFTC decision and requested a suspension of the corrective order, but the Supreme Court of Korea declined the appeal, marking a victory for FRAND.

Earlier this year, ACT | The App Association submitted a public interest statement in support of the KFTC’s Corrective Order. As representatives of thousands of tech innovators, patent holders, and licensors, we firmly agree with the Korean Court’s analysis of Qualcomm’s abusive behavior, particularly its failure to license access to its SEPs on FRAND terms.

Abuses to FRAND licensing commitments not only harm innovation amongst software developers and hardware manufacturers, but those abuses also result in higher prices and fewer choices for consumers. It is critical that the dynamic digital ecosystems—which include 5G, the internet of things, and the next generation of telecommunications standards—are able to develop and grow in an environment that does not threaten abusive licensing practices for SEPs.

The Korean Supreme Court’s decision marks the end of procedural delays on the KFTC’s Corrective Order, and it is a victory for supporters of the FRAND commitment. With the Corrective Order in effect, we can now take a significant step towards achieving a competitive and accessible environment that fosters the growth of open technology standards.