IP Newsletter | Spring 2016
Amended KFTC Intellectual Property Rights Guideline Takes Effect
On March 30, 2016, the Korea Fair Trade Commission ("KFTC") announced that the amended Guideline Regarding the Unfair Exercise of Intellectual Property Rights (the "IPR Guideline") became effective on March 23, 2016 (draft was announced on December 16, 2015). One of the major drivers for amending the IPR Guideline was that the previous IPR Guideline regulated de-facto standard essential patents ("SEPs") as if they were regular SEPs. In response, the KFTC received opinions stating that such regulation could over-regulate the justifiable exercise of IPRs. Also, as noted in the KFTC's press release at the time of the announcement of the draft amendment, the KFTC intends to amend the purpose of the IPR 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 IPR Guideline also streamlines certain provisions which are not directly related to the anti-competitiveness assessment.

Most notable changes in the amended IPR Guideline are:

1. Changes to the Definition of SEPs

The amended IPR Guideline limits the definition of "standard technology" to technologies selected as a standard by the government, standard setting organizations, business associations, groups of companies with similar technologies, and other similar bodies. Moreover, the amended IPR has removed technologies that are used widely in the relevant technology field as a de facto standard from the definition of SEPs. The definition of SEPs was also amended to refer only to those patents that must be licensed to manufacture goods or provide services which implement a standard technology, and for which a voluntary commitment to license on fair, reasonable, and non-discriminatory terms is required from the patent holders.

2. Deletion of References to De Facto SEPs

In line with the amended definition of SEPs, the amended IPR Guideline removes references to de facto SEPs throughout the IPR Guideline. According to the KFTC's press release, the KFTC will now review the legality of exercising de facto SEPs based on the standards for non-SEPs, rather than for SEPs.

3. Provisions Regarding Unfair Licensing Conditions

The amended IPR Guideline recognizes that the choice of governing law and dispute resolution mechanism is not relevant to analyzing the anti-competitiveness of licensing terms. Therefore, the amended IPR Guideline removed the reference to the "choice of governing law and dispute resolution mechanism which is unilaterally unfavorable to one party" as a factor in determining whether an exercise of patent rights is unfair.

4. Standards for Determining Unfair Refusal to License

The amended IPR Guideline focused its review of the refusal to license on the anti-competitiveness of the refusal. More specifically, the amended IPR Guideline states that "unfairness" in a refusal to license will be reviewed by examining such factors as (i) whether the intent or purpose in refusing to license is related to the restraint of competition in the relevant market; (ii) whether one cannot participate in the relevant market or unavoidably continues to be in an inferior competitive position in the relevant market because it is practically impossible to manufacture, supply or sell the product or service without the use of the technology for which the license was refused; (iii) whether a particular enterprise has exclusive possession or control over the relevant technology; (iv) whether it is practically, legally, or economically impossible to acquire a technology substitutable with the technology for which the license was refused; and (v) whether the refusal to license caused, or may cause, competition-restraining effect.

According to the KFTC, the KFTC hopes to make the regulations regarding the exercise of IPRs more rational and thereby promote innovation.
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If you have any questions regarding this article, please contact:
Duck-Soon CHANG
Gene-Oh (Gene) KIM
Brian Tae-Hyun CHUNG
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