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Qualcomm Fined $865 Million By South Korean Antitrust Regulator (zdnet.com)
South Korea's antitrust regulator has fined Qualcomm $854 million for what it called unfair business practices in patent licensing and modem chip sales, a decision the U.S. chipmaker said it will challenge in court. From a report on ZDNet: Qualcomm's business model includes collecting royalty payments from clients, which are calculated on the price of the handset using the chip, rather than the price of the chipset itself, and royalties from its patents. The KFTC has said it will issue a corrective order specifying the precise business practices with which it took issue, although Qualcomm has pointed out that this usually takes between four and six months. "Qualcomm strongly believes that the KFTC findings are inconsistent with the facts, disregard the economic realities of the marketplace, and misapply fundamental tenets of competition law," Don Rosenberg, executive vice president and general counsel for Qualcomm, said in response to the fine.
This case will open up all kinds of issues. Can a business set prices according to what a potential customer can pay? Car mechanics have often charges more for working on expensive cars than for working on more common cars. Even cops often let working stiffs slide a bit on traffic tickets and are harsher on flashy cars. A young, single man in a shiny new Corvette is far more likely to get tickets than a mom and pop with a station wagon and two kids in the back seat. So how is it that we can disallow a business from charging a higher price from another business, selling an unusually expensive cell phone?
The recent U.S. Supreme Court ruling in favor of Samsung over Apple decided the same thing. Samsung was only financially liable for patent infringement on the component which was found to be in violation, not the entire product.
Basically both of these rulings are saying if you own a patent used to make a special type of screw and you license it for 2% of the price, you are only entitled to 2% of the price of the screw. Not 2% of the price of a house because the screw happened to be used in making the house. They're both the right decision. Deciding otherwise leads to insanity like the band whose CD you played at your wedding and the company who designed the invite cards for the wedding being entitled to a percentage of the cost of your wedding.