Anti-abuse of intellectual property rights under the anti-monopoly law: China's approaches

• Author: GU Minkang
• Pages: 488-509

FRONTIERS OF LAW IN CHINA

VOL. 10 SEPTEMBER 2015 NO. 3

DOI 10.3868/s050-004-015-0027-0

ARTICLE

ANTI-ABUSE OF INTELLECTUAL PROPERTY RIGHTS UNDER THE

ANTI-MONOPOLY LAW : CHINA’S APPROACHES

GU Minkang*

Even though China’s first Anti-Monopoly Law (AML) was effective on August 1,

2008, the implementation of Article 55 has been delayed until 2014 when several actions

were taken. For examples, several foreign giant intellectual property holders were

investigated for possible abuse of their intellectual property rights and the State

Administration for Industry and Commerce released the Rules on Prohibiting Conducts

of Abusing Intellectual Property Rights by Excluding or Restricting. The underlying

message is obvious: China starts to pay more and more attention to the protection of

intellectual property (IP) rights on the one hand, she decides to seriously deal with the

abuse of intellectual property rights by intellectual property owners, especially those

giant international companies. Because the issue of how to balance the tension between

IP law and the AML is a new topic in China, this paper intends to outline the prevailing

experiences from foreign jurisdictions especially from the United States and European

Union and to propose some useful strategies and approaches, which are fit into China’s

reality.

INTRODUCTION .................................................................................................................... 489

I. THE ANTITRUST INVESTIGATIONS ........................................................................... 489

II. THE SAIC RULES .................................................................................................... 493

III. THE NEWLY ESTABLISHED IP COURTS.................................................................. 494

IV. RELEVANT COMPETITION POLICIES ...................................................................... 495

V. STRUCTURE OF THIS PAPER .................................................................................... 496

A. Experiences from US and EU.........................................................................496

1. US Experiences: From Scrutiny to More Protection..................................... 497

2. EU Experiences: More Balanced Attitude ..................................................... 499

3. Relevant Legislation and Implementation in EU and US ..............................500

4. Short Summary.............................................................................................. 502

B. Chinese Strategy and Practice .......................................................................502

1. Approaches to Deal with Excessive Price..................................................... 503

* (󳕓󰈤) Professor, at School of Law, City University of Hong Kong, Hong Kong. Research interests

include Chinese and comparative company law, Chinese and comparative competition law and other

international commercial law topics. Contact: lwgu@cityu.edu.hk

2015] ANTI-ABUSE OF INTELLECTUAL PROPERTY RIGHTS UNDER THE ANTI-MONOPOLY LAW 489

2. Approaches to Deal with Patent Pool............................................................ 503

3. Approaches to Deal with the Refusal to License ........................................... 505

4. Approaches to Deal with Other Issues........................................................... 505

CONCLUSION.........................................................................................................................508

INTRODUCTION

Those who are engaging in research on either intellectual property (IP) law or

antitrust law (or competition law) may be aware of the several actions taken recently by

Chinese authorities. Firstly, there was an investigation into Qualcomm by China’s

National Development and Reform Commission (NDRC), the government agency in

charge of pricing violations (including price monopolies). According to reports,

Qualcomm was imposed a penalty of RMB6.088 billion ($975 million) for its abuse of

dominant market position in China. The fine was 8% of Qualcomm’s China sales in 2013.

Secondly, China’s State Administration for Industry & Commerce (SAIC), the nation’s

main business authority in charge of implementing China’s Anti-Monopoly Law (AML)

in the area of abusing market dominant position, visited Microsoft offices in Beijing,

Shanghai, Guangzhou and Chengdu. Thirdly, on June 10, 2014, the SAIC released the

Rules on Prohibiting Conducts of Abusing Intellectual Property Rights to Exclude and

Restrict Competition (Draft) for the purpose of soliciting comments from the public.

Subsequently, the SAIC officially issued the Rules on Prohibiting Conducts of Abusing

Intellectual Property Rights to Exclude and Restrict Competition (SAIC Rules) on April 7,

2015. Fourthly, on August 31, 2014, the National People’s Congress (NPC) Standing

Committee decided to establish three Intellectual Property Courts in Beijing, Shanghai

and Guangzhou.

I. THE ANTITRUST INVESTIGATIONS

This paper will start with three cases where three foreign firms, i.e. Inter Digital Inc.,

Qualcomm and Microsoft, were under investigation by Chinese authorities.

Inter digital Inc. (IDC) is an American company that holds many essential standard

patents in wireless telecommunication sector. It was accused for the abuse of market

dominant position by: (1) charging unfairly high prices; (2) requiring grant-back patents

freely; and (3) tying non-essential standard patent technology with essential standard

patent technology.1 On May 22, 2014, the NDRC announced to suspend the antitrust

investigation against IDC after IDC promised to eliminate the anti-competitive effects

and to restore the market competition order.2 In fact, on December 6, 2011, Huawei

1 HUANG Wei & LIN Cathy, A Second Look at IDC Investigation Case in China, Jun. 8, 2014, available

at http://www.lexology.com/library/detail.aspx?g=bd34e778-468d-4a6b-8428-4ebc148dec0a (last visited Feb.

5, 2015).

2 Id.