LG Sides With Korean FTC In $915 Million Lawsuit

LG Electronics has now officially decided to take part in a roughly $915 million lawsuit against Qualcomm in South Korea, joining Apple, Intel, MediaTek, and Huawei and siding with the country's Fair Trade Commission (FTC) local sources report. The case originates from back in mid-2016 and centers around alleged breaches in fair trade rules for the region following over a year of investigations. Specifically, the US-based chipset manufacturer is said to have breached the rules with its collection of royalty fees related to its standard essential patents (SEPs). It collects those based on the value of the mobile device its chips are used in rather than a preset value placed on the computing hardware itself. That's outside of the norm since chips are normally assigned a value and then sold at that cost rather than the total value of a smartphone, tablet, or other devices -- which includes value derived from non-Qualcomm components, features, and design elements. As the de facto number one supplier of smartphone chips the practice was bringing in over a billion dollars in revenue for the company from a huge array of OEMs in 2016.

LG's participation bolsters the case

The prior chapter of the case ended in 2016 with a $915 million fine against Qualcomm but a suit was filed in response to challenge that ruling, leading to the current situation. LG's decision to take part may actually bolster the FTC's case against Qualcomm and its defense of the initial findings of the court. That's because the initial case had also included current leading global smartphone manufacturer Samsung siding with the government agency. The company has been among the top sources of income for Qualcomm, using the chipset maker's Snapdragon SoCs in its flagships and other devices sold in the US and China as opposed to its in-house Exynos chips. Samsung dropped out of the case entirely after the two companies were able to reach a more favorable agreement for the Korean tech giant in 2018. That arguably removed one the FTC's most obvious examples highlighting how Qualcomm's practices impact OEMs but LG could bring significant weight to shore up the agency's arguments.

Another case, stemming from the US Federal Trade Commission, could be used by the Korean FTC as well. A US court decided in November of this year that Qualcomm's practices were not in keeping with the countries regulations. The determination was based on similar allegations to those made in the Korean courts and centered around Qualcomm's apparent abuse of its position compared to rivals. Because Qualcomm's networking innovations are now considered standard features but only available via Qualcomm chips, the company is now required to allow rivals to purchase licenses. That ruling is also part of a larger ongoing case pertaining to its license agreements effectively forcing manufacturers to agree to additional licensing directly from Qualcomm, stifling competition. The Korean FTC may be able to point to the US cases in support of the allegations that it is not participating in its respective market fairly and according to local laws.

No end in sight for Qualcomm

As shown above, Qualcomm's troubles with licensing and associated court cases have been going on for quite some time now. Its most recent case is currently expected and likely to extend for at least a few more years, irrespective of previous rulings, in order to ensure that the correct ruling is made. LG's participation is going to have some impact on that but it isn't immediately clear whether it will serve to speed things up or slow the process.

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