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Analysing recent developments in Qualcomm’s SEP licensing practice

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Sehwan Choi of FirstLaw provides an overview of Qualcomm’s IP policy as well as related disputes concerning SEPs and FRAND commitments in Korea

Along with the development of IoT and AI technologies, there has been an increasing need to utilise information and communication technologies (ICT) standards in various fields such as automobiles, home appliances, robots and industrial systems. Accordingly, it is critical, not only for the ICT industry but for other industries as well, to closely monitor leading cases on standard essential patents (SEPs) with a fair, reasonable and non-discriminatory (FRAND) licence.

While Qualcomm has been achieving the highest rank in the SEP licensing market in terms of the volume of its SEPs as well as the amount of royalty earned, its unique licensing practice caused conflicts with national antitrust authorities in all IP5 countries. In particular, legal actions associated with SEPs and FRAND commitments were brought against Qualcomm in South Korea and the United States, with leading global companies, including Samsung, Apple and Huawei, participating in both the US and Korean cases.

The Korea Fair Trade Commission (KFTC) and the Seoul High Court imposed sanctions on Qualcomm against the anticompetitive conduct it exhibited when licensing out its SEPs. This is effectively a win for competitor and customer companies of the SEP holder.

Case history

Although the parties of the case at issue in Korea are seemingly Qualcomm and KFTC, a number of other ICT companies were also involved in the case. You can see why by reviewing the history of the dispute as summarised below.

The KFTC decided to institute an investigation of Qualcomm's licensing practice in February 2015 alleging that Qualcomm violated the Korean Antitrust Law. During this investigation, Qualcomm's rival and customer companies intervened in the action to assist the KFTC and actively cooperated to submit their own briefs and certain confidential materials corroborating arguments contained in the briefs. After thorough review on the merits, the KFTC issued an order for Qualcomm to correct its licensing practice in January 2017 (Case No. 2017-025).

Qualcomm brought a suit against the KFTC's administrative order before the Seoul High Court, and the above-mentioned companies participated in the litigation procedure in support of the KFTC. Samsung and Apple, who were among the interveners, eventually reached a settlement with Qualcomm whereas LG, Intel, Huawei and MediaTek remained until the KFTC won the suit in January 2020 (Case No. 2017Nu48).

Qualcomm appealed to the Supreme Court, and the above four companies are defending the appeal together with the KFTC (Case No. 2020Du31897).

Each party's position in the supply chain

Qualcomm is the holder of SEPs and also the supplier of modem chips in which the inventions of the SEPs are implemented.

Intel and MediaTek, being baseband chipset suppliers, are direct competitors of Qualcomm. LG and Apple are SEP licensees and handset manufacturers, which purchase modem chips from Qualcomm. Samsung and Huawei make both the chipsets and smartphones, and also need a licence agreement with Qualcomm.

Fig.1: Qualcomm’s licence model


Qualcomm's licence model

Qualcomm allegedly has monopoly power over modem chips and breached FRAND commitments through its anticompetitive conduct under the Korean Antitrust Law. Alleged illegal acts at issue can be categorised into three.

Firstly, Qualcomm refused to grant an exhaustive SEP licence to rival chipset suppliers. Instead, it offered a non-exhaustive agreement such as a covenant not to sue. Such a refusal to licence policy prevented Qualcomm's patent rights from being exhausted when the rivals manufactured modem chips by using Qualcomm's patented technology. Although Qualcomm did not raise any claim against the competitors' modem chips, it seemed possible that Qualcomm could claim its patent rights against the handsets installed with the competitors' modem chips.

Secondly, Qualcomm required smartphone makers (i.e. buyers of its modem chips) to sign a separate SEP licence agreement before (or during) supplying its modem chips to them. This is a so-called no licence, no chip policy. As such, Qualcomm was in a position where it could threaten to cut off the modem chip supply and technical support to the smartphone companies at any time.

Lastly, based on the dominant position built up by the mentioned policies, Qualcomm concluded licence agreements with the smartphone manufacturers under terms and conditions favourable to itself. In particular, the royalty rate was calculated based on the unit of handset, not the unit of modem chip for every patent. Further, the licence terms included a royalty-free cross-licensing provision which set up a patent umbrella centred on Qualcomm.

KFTC order

According to the KFTC, Qualcomm's strategies were as follows: excluding rival chipset companies from the market by a refusal to licence policy; forcing a no licence, no chip policy on handset companies; setting the royalty rate at handset level to raise the amount; and building a Qualcomm-centred "patent umbrella" to protect itself from rivals' patents. As a result, its monopoly position could be further strengthened in both the SEP and modem chip markets, and the refusal to licence policy and the no licence, no chip policy could be maintained based on its monopoly power.

The KFTC decided that those licensing practices constituted anticompetitive conduct which violated the Antitrust Law. The KFTC ordered Qualcomm to take corrective measures for the illegal conduct and also imposed a penalty of about 1 trillion won (about $837 million). This penalty amount is the highest amount ever since the establishment of the KFTC. Qualcomm appealed against this administrative order to the Seoul High Court.

Seoul High Court decision

The Seoul High Court's decision is as follows: (i) as for the refusal to licence and no licence, no chip policies, Qualcomm's practices are illegal and the KFTC's remedies are appropriate; (ii) with regard to the KFTC's corrective measure for the licensing terms, however, Qualcomm's conduct is not illegal and the KFTC's measure is inappropriate; (iii) lastly, despite the inappropriateness of the KFTC's measure regarding the licensing terms, the penalty order is appropriate in its entirety since the former two conducts are illegal.

With respect to the above two policies, the High Court decided that Qualcomm violated its obligation to negotiate FRAND licences in a diligent manner by simply refusing to licence its SEPs to rival chipset suppliers. The court required Qualcomm to make exhaustive licences available to willing licensees under fair, reasonable and non-discriminatory terms.

The High Court also ruled that Qualcomm should not condition its supply of modem chips on the buyer's status as a patent licensee and must negotiate with the buyer under FRAND terms. Among other points, it was stressed that the SEP holder's unilateral decision to suspend the modem chip supply would cause more severe harm to the buyer than an injunction that might be issued by the court.

On the other hand, the court held that although the favourable licence terms are the results of the two anticompetitive conducts discussed above, the royalty rate at handset level and the royalty-free cross-licensing are not illegal per se.


The Seoul High Court's decision puts the brakes on Qualcomm's licensing practice while taking the KFTC's side and, at the same time, rival chipset makers' and handset companies' side as well. Qualcomm filed an appeal against the decision and the appeal is currently pending before the Supreme Court.





1. 事件の経過





2. サプライチェーンにおける各企業の位置づけ



3. クアルコムのライセンスモデル





4. 韓国公取委の処分



5. ソウル高等裁判所の判決





6. 結び



Sehwan Choi

崔 世煥(チェ セファン)

Dr Sehwan Choi is a patent attorney admitted to the Korean Patent Bar. As a seasoned member of FirstLaw, a top-tier IP firm based in Seoul, he has accumulated extensive experience in filing and prosecuting patent applications, providing expert opinions, and handling IP trials and litigations, in the fields of ICT, semiconductors, vehicles and materials. He has also served as an expert commissioner before the court and an examiner at the Public Procurement Service at the Ministry of Economy and Finance.

After receiving his BS degree in mechanical and aerospace engineering from Seoul National University, he continued studying control and electrochemical processes at graduate school, while working as a research scientist at an institute belonging to the same university, and obtained his PhD degree.

Dr Choi completed an LLM course at Waseda University and also worked at an IP law firm in Tokyo. He has given a lot of presentations before various audiences in Japan as well as Korea to share his expertise in technical and legal areas. Armed with a profound understanding of the Japanese IP system, he, along with his team at FirstLaw, provide Japanese clients with customised legal services.

第一特許法人(FirstLaw P.C.)

弁理士 工学博士

学 歴:ソウル大学 機械航空工学部(B.S)、ソウル大学大学院 機械工学部(Ph.D.)、早稲田大学大学院 法学研究科(LL.M.)

経 歴:ソウル大学 共同研究所、韓国の特許事務所、日本の特許事務所(東京)


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