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A South Korean court on Monday rejected Qualcomm Inc’s request to suspend an order by the country’s antitrust agency to take corrective action on the way it licenses patents.
In December, the Korea Fair Trade Commission (KFTC) fined Qualcomm 1.03 trillion won (912.34 million US dollars) for what it called unfair business practices in patent licensing and modem chip sales.
The regulator also ordered the US firm to negotiate in good faith with rival chipmakers on patent licensing, and renegotiate chip supply agreements with mobile phone makers if requested.
If the order is upheld, Qualcomm’s licensing business model is under fire anew.
Qualcomm has two businesses. Its sells semiconductors that power today’s smartphones and other devices, and it licenses its portfolio of thousands of core cellular patents to smartphone makers.
While the chip business generates most of Qualcomm’s revenue, patent licensing accounts for about three-quarters of its profit.
In January, Apple sued Qualcomm and cut off royalty payments, costing Qualcomm about 500 million US dollars per quarter. Among other things, Apple claims Qualcomm’s per-device royalties enable it to collect fees on innovations that it had nothing to do with.
Qualcomm counters that its fundamental cellular technologies breathe life into mobile phones. Without them, a 700-dollar iPhone is a glorified iPod Touch.
Qualcomm subsequently filed two lawsuits with the Seoul High Court, one calling for the nullification of the regulator’s decision and another seeking the suspension of the corrective order until a ruling on the first is made.
The court turned down the suspension request because it did not believe the regulator’s order would pose a risk of “irreparable damage” to Qualcomm, a spokeswoman told Reuters.
The court has not yet made a ruling on the first lawsuit calling for the cancellation of the regulator’s decision.
(CGTN)
