Qualcomm Fined $865 Million By South Korean Antitrust Regulator

South Korea's antitrust regulator has fined Qualcomm $854 million for what it called unfair business practices in patent licensing and modem chip sales, a decision the U.S. chipmaker said it will challenge in court. From a report on ZDNet: Qualcomm's business model includes collecting royalty payments from clients, which are calculated on the price of the handset using the chip, rather than the price of the chipset itself, and royalties from its patents. The KFTC has said it will issue a corrective order specifying the precise business practices with which it took issue, although Qualcomm has pointed out that this usually takes between four and six months. "Qualcomm strongly believes that the KFTC findings are inconsistent with the facts, disregard the economic realities of the marketplace, and misapply fundamental tenets of competition law," Don Rosenberg, executive vice president and general counsel for Qualcomm, said in response to the fine.

Retaliation from Samsung

[sinij]

This is corporate lawfare by Samsung, which is quasi-government corporation in Korea, against Qualcomm which is a public US-based corporation. This move is also likely Korean government response to Apple vs. Samsung. As such, this will quickly become political fight between Trump administration and Korean gov't.

Legal Nightmare

[Jim Sadler]

This case will open up all kinds of issues. Can a business set prices according to what a potential customer can pay? Car mechanics have often charges more for working on expensive cars than for working on more common cars. Even cops often let working stiffs slide a bit on traffic tickets and are harsher on flashy cars. A young, single man in a shiny new Corvette is far more likely to get tickets than a mom and pop with a station wagon and two kids in the back seat. So how is it that we can disallow a business from charging a higher price from another business, selling an unusually expensive cell phone?

You are over complicating this

[aepervius]

This has no impact of the above, because none of the above you mentioned use patent. Basically Qualcomm license a chipset, chipset normally costing Y to another firm, and that chipset was then used in a phone costing X. The royalty rather than being calculated on Y, which you normally expect, was calculated on the price of the final product X in which it was used. SK Regulator took offense of this. Again, royalty has nothing to do with the case of offering differentely priced service, as royalty are often r

Consistent with recent US Supreme Court ruling

[Solandri]

The recent U.S. Supreme Court ruling [slashdot.org] in favor of Samsung over Apple decided the same thing. Samsung was only financially liable for patent infringement on the component which was found to be in violation, not the entire product.

Basically both of these rulings are saying if you own a patent used to make a special type of screw and you license it for 2% of the price, you are only entitled to 2% of the price of the screw. Not 2% of the price of a house because the screw happened to be used in making the house. They're both the right decision. Deciding otherwise leads to insanity like the band whose CD you played at your wedding and the company who designed the invite cards for the wedding being entitled to a percentage of the cost of your wedding.