S. Korea’s antitrust watchdog has ordered Dolby, the world’s leading digital-audio system maker, to scrap its unfair contract terms regarding the licensing of its technology, which worked to Korean companies’ disadvantage, including Samsung and LG.
The Fair Trade Commission (FTC) said on August 5 it had ordered Dolby to stop abusing its dominant market positions in compelling partner companies to sign unfair licensing contracts.
Since Dolby holds patents covering the AC-3 technology, the global standard digital-audio coding technology, nearly 90 Korean companies (including Samsung Electronics and LG Electronics) had to sign a licensing agreement with Dolby to produce digital TVs and other digital sound systems. The US digital-audio system maker last year raked in 200 billion won (USD192.1 million) in royalty payments from S. Korean companies
The FTC said Dolby made it completely impossible for the licensee to even challenge its intellectual property and ownership rights. Dolby even had clauses that would allow it to terminate the licensing agreement if the licensee took issue with its intellectual property or if the licensee “threatened” infringement or actually misused its intellectual property rights.
“AC-3 is an irreplaceable standard technology, so it has a huge impact on fair market competition. We will keep close tabs on holders of industry-standard technologies like Dolby to detect unfair trade practices,” said the FTC.
