Over the past few years, South Korea’s antitrust regulator has been one of the toughest on issues of intellectual property. Now, the leader of the Korea Fair Trade Commission (KFTC) says the body is about to start an inquest focused on how patents affect competition in the Internet of Things (IoT) or 5G space.
KFTC chairman Kim Sang-jo mentioned the role of patents in IoT during an appearance Monday at which he outlined five priorities for competition policy. 5G communications, digital broadcasting and connected devices were named as fields in which the KFTC plans to study the market for “monopolistic and oligopolistic situations”. Apparently the watchdog will establish a “monitoring network for prevention of patent rights abuse”; it is not clear what that means, but if it leads to investigations of specific patent owners, it will make waves given the commission’s history of dealing out major fines.
The KFTC’s $912 million fine of Qualcomm over licensing practices in December 2016 marked it out as a body that would take a tough stance on IP and antitrust issues. The US chipmaker has already had one appeal rejected by a district court, and earlier this month it announced it will appeal again to the Korea Supreme Court. As the dispute continues, the KFTC has shown no indication that its Qualcomm probe was a one-off; around the time it delivered its verdict on Qualcomm, it established a “Knowledge Industry Anti-Monopoly Division” to handle future IP-related instigations.
Now under new leadership after a change in government, the KFTC's IP focus looks set to continue. This week’s remarks on patents seem to be the first that have made it into the English-language press since Kim was appointed to the top post in May by new South Korean president Moon Jae-in. Nicknamed the “chaebol sniper”, Kim has made a career out of campaigning against the country’s big family-owned conglomerates as an activist investor. If patents come to be seen as one way to break the grip of chaebol on the Korean business environment, we could see the KFTC become even more active in the area under Kim.
In the country’s legislature, too, patents are in the spotlight as questions continue to be asked about the power of the big conglomerates. A lawmaker from the opposition Liberty Korea Party, Representative Kim Jung-hoon, called attention to Korean SMEs’ lack of success in patent litigation this week. Citing figures from the Korean IP Office (KIPO), Kim said that SME plaintiffs lost about 85% of patent lawsuits against larger companies last year. The smaller firms fared better when looking also at trademark and design suits.
The statistics are not necessarily surprising. Win rates for all kinds of plaintiffs, not just small companies, are notably low in Korean courts. Even helping to shift the disparity in resources between the two parties, which Kim proposes doing by increasing funding to support SME litigation, might not result in an environment where small companies can effectively prevent big ones from free riding on their technology.
One thing is certain: the political mood in South Korea is very anti-chaebol at the moment. Whether policymakers see patents as tools of chaebol domination or potential bulwark against it could have a big policy impact.