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Qualcomm to Appeal $865M Fine by South Korea's Fair Trade Commission

Ray Le Maistre
12/29/2016
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Qualcomm says it will appeal what it calls an "unprecedented and insupportable decision" by the Korea Fair Trade Commission (KFTC) to impose a 1.03 trillion Won (US$865 million) fine on the chip giant for violation of Korean competition laws.

The KFTC has ruled that Qualcomm Inc. (Nasdaq: QCOM) is guilty of "abuse of market dominance" by refusing to license or restricting the licensing of cellular standard essential patents (SEPs) to other modem chipset vendors. See this translated ruling announcement for the full details.

But Qualcomm says it will "file for an immediate stay of the corrective order and appeal the KFTCs decision to the Seoul High Court" and appeal the size of the fine when the KFTC issues a "written decision and order" that makes its ruling effective.

Qualcomm says it "strongly disagrees with the KFTC's announced decision, which Qualcomm believes is inconsistent with the facts and the law, reflects a flawed process and represents a violation of due process rights owed American companies under the Korea-U.S. Free Trade Agreement (KORUS)." Full details of Qualcomm's response to the ruling can be found in this official statement.

Qualcomm, which holds the vast majority of intellectual property related to mobile chipsets, is no stranger to patent licensing disputes -- it has just resolved a dispute with Chinese manufacturer Meizu -- and is currently engaged in a battle of cellular patent wills as part of the IP Europe lobby group as 5G developments place an even greater demand on such intellectual property. (See Patents Prizefight Pending: Clash of the Tech Titans.)

Ray Le Maistre, Circle me on Google+ Follow me on TwitterVisit my LinkedIn profile, Editor-in-Chief, Light Reading

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Michelle
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Michelle,
User Rank: Light Sabre
12/31/2016 | 7:37:31 PM
Re: Massive test/precedent
Appealing such a hefty fine does seem to be predictable move. Is there a possibility that the appeal could bring a lowered fine? What happens to Qualcomm?
freehe
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freehe,
User Rank: Light Sabre
12/30/2016 | 6:51:37 PM
Qualcomm Fined
As my grandmother would say, "if one or two people say something it might not be true, but if multiple people say the same thing there has to be some truth to it"

Qualcomm needs to adhere to the laws in other countries before they go into the black, lose customers and risks going out of business.

 
freehe
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freehe,
User Rank: Light Sabre
12/30/2016 | 6:49:54 PM
Qualcomm Greed or Innocent
I am aware that some companies do steal ideas and violate laws but this fine seems to be too big too ignore. Qualcomm expected Korea's Fair Trade Commission to operate and offer lax fines the same as the US FTC.

Qualcomm learned a valuable lessons, every country has their own set of rules and regulations that companies must follow or there will be major consequences.
freehe
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freehe,
User Rank: Light Sabre
12/30/2016 | 6:47:28 PM
Qualcomm Fine

When implementing a new product or service companies should always make sure there is no hint of violation of laws, patents or copyrights.

Qualcomm is guilty of "abuse of market dominance" by refusing to license or restricting the licensing of cellular standard essential patents (SEPs) to other modem chipset vendors.

 

freehe
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freehe,
User Rank: Light Sabre
12/30/2016 | 6:45:30 PM
Re: Massive test/precedent
@Ray, good insight on the article. Curious to see the outcome.
Ray@LR
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[email protected],
User Rank: Blogger
12/30/2016 | 5:40:04 AM
Massive test/precedent
No matter how large the fine, the accused will always appeal a guilty verdict in these cases but this one looks critical.

If the decision is upheld that will create a precedent that will could start a chain reaction of other challenges and Qualcomm will not want that for many financial and operational reasons.

And then there's the size of this fine.... not only is it approaching $1 billion but it is more than 10% of Qualcomm's total IPR/licensing revenues for its most recent fiscal year. 

You wouldn't expect Qualcomm to take this without a fight but it really can't afford to if it wants to remain as the leading mobile powerhouse as we head towards 5G.   
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