South Korea slaps Qualcomm with record-setting $850M fine

Joe Mullin
Qualcomm displays some of its patents on a wall in its headquarters in San Diego, California.
South Korean regulators say that Qualcomm's patent-licensing methods violate Korean unfair competition laws, and the company must pay a fine of 1.03 trillion won, or about $850 million or £695 million. Qualcomm has said it will fight the massive fine in court.
The Korea Fair Trade Commission, or KFTC, held that Qualcomm refused to license certain standard-essential patents on its chips to rival chipmakers including Intel, Samsung, and MediaTek. The commission ordered Qualcomm to renegotiate those licenses in good faith, according to a Reuters report on the matter. The fine is the largest ever issued in Korea.
In its report on the Korean fineBloomberg notes that Qualcomm makes most of its profits, about $6.5 billion in its most recent year, from selling the rights to its chip technology.
Qualcomm "has violated its agreement to license patents on fair, reasonable, and non-discriminatory terms, known as FRAND," the Commission said in a statement.
In response, Qualcomm issued a statement calling the fine "an unprecedented and insupportable decision, relating to licensing practices that have been in existence in Korea and worldwide for decades."
Qualcomm also said the KFTC has shown no evidence of any harm to competition, which it claims is "robust among chip and handset suppliers" because Qualcomm's model promotes competition. The fine undermines incentives to invest.
"Importantly, this decision does not take issue with the value of Qualcomm’s patent portfolio," said Qualcomm general counsel Don Rosenberg. "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."
The KFTC directive won't become official until it issues a written decision and order, which typically takes about four to six months. Qualcomm has said it will immediately appeal at that time. The company will still have to pay the fine within 60 days after the written order comes out, although it will be subject to adjustment or refund based on the appeal.
In a separate case brought by the Korea Fair Trade Commission in 2009, Qualcomm was hit with a $209 million fine, which was the largest in Korea's history at that time. That fine is on appeal at the Korean Supreme Court, according to Bloomberg.
Last year, Qualcomm was fined $975 million by Chinese anti-monopoly regulators. The company did not challenge that decision, which also set rates and conditions for Qualcomm's licensing in China.
South Korea slaps Qualcomm with record-setting $850M fine Reviewed by Bizpodia on 01:23 Rating: 5

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