The Korea Fair Trade Commission (KFTC) recently announced that the amended Guideline Regarding the Unfair Exercise of Intellectual Property Rights came into force on March 23 2016 (the draft was announced on December 16 2015). One of the driving factors for amending the guideline was because the previous guideline regulated de facto standard-essential patents (SEPs) as if they were regular SEPs. The KFTC received feedback that this practice would overregulate the justifiable exercise of IP rights. Further, as noted in the press release issued when the draft amendment was announced, the KFTC intends to amend the purpose of the guideline to the "promotion of free and fair competition" (from the previous "promotion of fair trade practices"), and clarify when a refusal to license patents can be viewed as unfair. The amended guideline also streamlines certain provisions which are not directly related to assessing anti-competitiveness.
Changes to definition of 'SEPs'
The amended guideline limits the definition of 'standard technology' to technologies selected as standard by the government, standard-setting organisations, business associations, groups of companies with similar technologies and other similar bodies. Further, the amended guideline has removed technologies that are widely used in the relevant field of technology as a de facto standard from the definition of 'SEPs'. The definition of 'SEPs' has also been amended to refer only to those patents:
- which must be licensed in order to manufacture goods or provide services which implement a standard technology; and
- for which rights holders must provide a voluntary commitment to license on fair, reasonable and non-discriminatory terms.
Deletion of references to de facto SEPs
In line with the amended definition of 'SEPs', the amended guideline removes references to de facto SEPs throughout the guideline. According to the KFTC's press release, it will now review the legality of exercising de facto SEPs based on the standards for non-SEPs, rather than SEPs.
Provisions regarding unfair licensing conditions
The amended guideline recognises that the choice of governing law and dispute resolution mechanism is not relevant to analysing the anti-competitiveness of licensing terms. Therefore, the amended guideline has removed the reference to the "choice of governing law and dispute resolution mechanism which is unilaterally unfavourable to one party" as a factor in determining whether a patent right has been exercised unfairly.
Standards for determining unfair refusal to license
The amended guideline focuses its review of the refusal to license on the anti-competitiveness of the refusal. More specifically, the amended guideline states that unfairness in a refusal to license will be reviewed by examining factors such as whether:
- the intent or purpose of the refusal related to a restraint of competition in the relevant market;
- participation in the relevant market is prevented or unavoidably inferior because it is nearly impossible to manufacture, supply or sell the product or service without the use of the technology for which the licence was refused;
- a particular enterprise has exclusive possession or control over the relevant technology;
- it is practically, legally or economically impossible to acquire a substitute for the technology for which the licence was refused; and
- the refusal to license caused, or may cause, a restraint on competition.
According to the KFTC, it hopes to make the regulations regarding the exercise of IP rights more reasonable and thereby promote innovation.