NPEs in Check
In the future, Non-Practicing Entities (NPEs) won't be allowed to demand excessive patent royalties in Korea. Moreover, they will be unable to deny the application of FRAND principles or file unfair patent lawsuits.
The Korea Fair Trade Commission (FTC) announced on Dec. 23 that it will implement revised guidelines for its review on the wrongful use of intellectual property rights from Dec. 24. The guidelines are likely to affect patent disputes between Samsung Electronics and Apple. In particular, they are expected to somewhat dispel worries about the transformation of Nokia into an NPE resulting from the merger between Microsoft and Nokia.
The guidelines stipulate five types of abuse that NPEs perpetrate using their dominant position in the market, which includes excessive royalty demands, denial of FRAND principles, wrongful application of principles for standard-essential patents (SEPs), indiscriminate patent lawsuits, and business practices that target rival companies.
The country’s anti-trust regulator defined SEPs as patents that need the owner's consent to produce or supply services or products using standard technology, specifying that patent violation lawsuits filed by SEP holders without prior negotiation are more likely to be unfair. In addition, it will be illegal to bundle unnecessary patents into needed ones.