Whether SEP(Standard Essential Patent) owners’ multi-level licensing practices affect competition order in SEP related markets and violate antitrust law has been debated with regard to the decision of KFTC in 2017 Qualcomm case. The multi-level licensing practice has been explained as that a patent proprietor could impose different post-sale restrictions in each distribution channel even after the patent products have already been retailed through a legal sale process.
<br>This licensing practice includes a refusal to license to part manufacturers for making SEP parts, which are performing SEP method patents, and post-sale restrictions for the clients of the SEP components (the final product manufacturers). First, the refusal to license to SEP part producers should be a violation of FRAND commitments. Secondly, the post-sale restriction could not be allowed under the first-sale doctrine according to 2017 Impression decision by the Supreme Court of the United States.
<br>For this reason, this licensing practice by SEP owners should not be allowed any more. Actually, the multi-level licensing practice increases the risk of patent infringement and decreases the possibility of using standard technologies freely. Regardless of violation of patent principle, antitrust law could be applied to prohibit this patent strategy because of its anti-competitive effect, like exclusion of competitors in the SEP component market and the price-increase of the final merchandises with standard technologies.
