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Microsoft Seeks Position of Strength in Patent Fee Negotiations with Samsung, LG
Voluntary Corrective Measure
Microsoft Seeks Position of Strength in Patent Fee Negotiations with Samsung, LG
  • By matthew
  • September 19, 2014, 08:32
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Much attention is being paid to the reason behind Microsoft's sudden decision to carry out a “Consent Decision” procedure as the Korea Fair Trade Commission (FTC) is about to finalize its examination of the effects of the merger between Microsoft and Nokia. The consent decision refers to a system that quickly finalizes a case without legal sanctions, when a business operator suggests a measure to prevent the re-occurrence of damages that would affect consumers or rival companies, along with compensation for damages.

On Sept. 17, the FTC announced that it had decided to continue its review for Microsoft's purchase of Nokia, since it is necessary to additionally check whether or not to initiate the consent decision requested by Microsoft.

An official at the FTC said, “We held a meeting and reviewed a measure suggested by Microsoft. But we have to check the measure again because of its complex nature and a lot of issues involved.” The official added, “We asked the company to submit a more specific corrective measure within three weeks.” A lack of a specific mention to not excessively raise patent fees is reportedly a decisive factor in the regulator's decision.

Previously, the Korean regulatory body was expected to approve the M&A deal under certain conditions, stricter than those imposed by China or Taiwan, which would prevent the tyranny of Non-Practicing Entities (NPEs), or patent trolls. As a result, experts are saying that the software giant suggested a consenting decision prior to the approval of transactions by the FTC.

Samsung and LG Electronics' strong opposition stemming from their worry about the creation of a patent troll is cited as a reason for Microsoft's move. The software company's decision can be interpreted to reflect a calculation that it could assert dominance over other companies in negotiations when proceeding with an increase in patent fees. That is the reason why Microsoft's request for consent decision is getting a lot of attention.

However, some point out that the procedure is not likely to be finalized. It is necessary for relevant government agencies such as the Ministry of Science, ICT and Future Planning and the Korean Intellectual Property Office to reach an agreement. Moreover, the issue has to be discussed with the Public Prosecutor General as well, since he is the one who takes legal action against perpetrators when the existing market system is disturbed. The prosecution's position is that the M & A transaction should be approved by the FTC, not through the consent decision, where a legal punishment is impossible.