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South Korea: Dolby Labs anti-trust problems

South Korea’s anti-trust watchdog, the Fair Trade Commission (FTC), has reportedly ordered US-based audio specialists Dolby Labs to halt alleged “unfair trade practices” which the FTC says relates to the licensing of its technology locally.

The FTC argues that Dolby’s IP “infringes on the rights of local companies”. The FTC says Dolby has used its superior market position in audio encoding and compression to compel partner companies to sign “inherently unfair licensing contracts”.

Amongst Dolby’s local companies some major electronics firms have licensing deals with Dolby, not least Samsung and LG.  The key technology on the FTC’s list is Dolby’s AC-3 audio compression format which has now become a global standard and is used in most audio and TV systems.

The Korea Observer newspaper says that Dolby Labs lest year received $192 million in royalty fees from South Korean businesses.

The FTC is arguing that Dolby’s contracts are so tightly written that “makes it impossible for the licensee to even challenge in any way the intellectual property and ownership right, and restricts the sublicensing of technologies acquired by the partner company.”

“Dolby has been told to revise the terms of the agreements and to sign more balanced contracts,” the FTC said in a statement.

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