Published: 12/17/14

The KFTC’s revised guidelines on abuse of IPRs indicate that the following licensing practices by the holder of standard essential patents (SEPs) may be deemed to be abusive: 

  • Coercing the licensee to accept a license of a non-SEP as a condition for the licensing of a SEP;
  • Not disclosing patents applied for or registered to increase the possibility of one’s technology being standardized or to avoid prior consultations on license conditions;
  • Unreasonably refusing to license the SEP;
  • Not licensing the SEP on FRAND terms so the patentee can strengthen its monopoly power or exclude competitors in the relevant market;
  • Requesting discriminatory terms for a SEP license, or imposing an unreasonable level of royalties;
  • Imposing licensing conditions that unreasonably restrict the licensee’s exercise of related patents held by the licensee, or
  • Unreasonably imposing licensing conditions that require a cross-license of non-SEPs held by the licensee. (See Section III.3.A & D(5)).

The KFTC also noted that a FRAND commitment obligates SEP holders to negotiate in good faith with willing licensees. This commitment avoids patent hold-up that “may occur as they file lawsuits for patent infringement seeking injunction in order to exclude competitors from the market, impede business activities of competitors or impose excessive royalties or unreasonable conditions to a willing licensee.” In determining whether a SEP holder fulfills its obligation to negotiate in good faith, and avoid an abuse of dominance determination, the KFTC will look at whether: 

  • The SEP holder officially proposed to negotiate with a willing licensee;
  • The period of negotiation with a willing licensee was appropriate;
  • The licensing terms are reasonable and non-discriminatory; and
  • It was agreed that disputes on the licensing terms would be referred to a court or an arbitration body for resolution.

The KFTC noted that a SEP holder’s seeking of injunctive relief for patent infringement is unlikely to be determined as abusive if: (1) The licensee refuses to comply with the decision of a court or an arbitration body, or refuses to enter into a license agreement on FRAND terms when the specific details of the FRAND terms have been objectively confirmed in proceedings in a court or an arbitration forum; or (2) injunctive relief is recognized as the sole remedy for the SEP holder as the willing licensee is unable to pay damages due to its imminent bankruptcy. (See Section III.3.B).

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