Unification, Coordination, and Improvement of Anti Monopoly System Rules in China's Intellectual Property Field | Agreement | Anti Monopoly

On June 29, 2023, the State Administration for Market Regulation announced the revised "Provisions on Prohibiting the Abuse of Intellectual Property Rights to Exclude and Restrict Competition", which will come into effect on August 1, 2023. This marks the comprehensive coverage of China's anti-monopoly system rules in the field of intellectual property, the coordination and consistency with relevant anti-monopoly guidelines, and further refinement and improvement in specific content.

1. the basic framework of the rules of the anti-monopoly system in the field of intellectual property in China has been established, it is necessary to realize the unification, 1. coordination and further improvement of the rules.

The enforcement of antitrust laws in the field of intellectual property involves the balance between maintaining competition and promoting innovation, which is both important and complex. China's relevant legislation and policy measures in recent years attach great importance to this. from the principled provisions of article 68 of the antimonopoly law to the stipulation of "preventing the abuse of intellectual property rights" as one of the strategic priorities in the outline of the national intellectual property rights strategy, from the "National Innovation-Driven Development Strategy Outline" to "improve the anti-monopoly review system to prevent the abuse of intellectual property rights" to the "Intellectual Property Power Building Outline" to "improve the legal system for regulating the abuse of intellectual property rights and anti-monopoly and anti-intellectual property-related legislation." Anti-unfair competition and other fields "all show that my country attaches great importance to the protection of intellectual property rights, and also attaches importance to the protection and promotion of market competition. On November 30, 2020, General Secretary Xi Jinping emphasized when presiding over the twenty-fifth collective study of the Political Bureau of the CPC Central Committee on strengthening my country's intellectual property protection work, "Coordinate the promotion of patent law, trademark law, copyright law, anti-monopoly law, Science and Technology Progress Law and other revisions to enhance the consistency between laws"; "We must coordinate the work of intellectual property protection, anti-monopoly, fair competition review, etc., and promote the independent and orderly flow and efficient allocation of innovative elements"; "Study and formulate relevant systems to prevent the abuse of intellectual property rights"; "It is necessary to improve laws, regulations and policy measures related to intellectual property anti-monopoly and fair competition, and form a legitimate and powerful means of restriction". This puts forward clear requirements for the establishment and improvement of anti-monopoly rules in the field of intellectual property in China.

Although Article 68 of China's Anti Monopoly Law provides principled provisions on anti-monopoly issues in the field of intellectual property, which states that "the behavior of operators exercising intellectual property in accordance with relevant laws and administrative regulations does not apply to this Law; however, the behavior of operators abusing intellectual property to exclude or restrict competition is subject to this Law." However, in practice, how to correctly understand the behavior of abusing intellectual property to exclude or restrict competition, clarify the boundary between legitimate exercise of rights and the abuse of exclusion or restriction of competition, and accurately apply the law, it is necessary to provide detailed rules through the formulation of relevant rules and guidelines to better guide anti-monopoly law enforcement practice and enhance the operator's expectations of the legality of their own business activities. Therefore, on April 7, 2015, the former State Administration for Industry and Commerce issued China's anti-monopoly regulations in the field of intellectual property - "Provisions on Prohibiting the Abuse of Intellectual Property to Exclude and Restrict Competition", which came into effect on July 1, 2015. On January 4, 2019, the Anti Monopoly Commission of the State Council also released the Anti Monopoly Guidelines on Intellectual Property. In this way, the basic institutional rules for anti-monopoly in the field of intellectual property in China have been established.

However, there are some problems with the existing anti-monopoly system rules in the field of intellectual property in our country, mainly including: firstly, the original "Regulations" were only departmental regulations issued by the State Administration for Industry and Commerce, which was one of the three anti-monopoly enforcement agencies at that time. The scope of application was limited to the anti-monopoly enforcement activities of the Administration for Industry and Commerce, and did not include the anti-price monopoly enforcement activities of the National Development and Reform Commission and its authorized agencies and the anti-monopoly review activities of the Ministry of Commerce's concentration of operators. Although the State Administration for Market Regulation, responsible for unified enforcement of anti-monopoly laws, made slight revisions to the original Regulations in 2020, this issue has not been resolved; The second is that the original Regulations and Guidelines are generally consistent, but there are still some differences in certain specific rules or different understandings due to different expressions, which also require coordination; Thirdly, the original Regulations not only limited the content involved, but also failed to make relatively detailed provisions in some aspects already involved, resulting in limited guidance for law enforcement agencies and operators.

In June 2022, the Anti Monopoly Law underwent its first revision, with significant changes in China's anti-monopoly rules in areas such as vertical monopoly agreements and concentration of operators. This requires the corresponding improvement of anti-monopoly regulations in the field of intellectual property in China, in combination with past law enforcement experience and new situations faced.

2. the new "Regulations" to achieve the comprehensive coverage and coordination of the rules of the anti-monopoly system in the field of intellectual property rights in China.

There are 33 articles in the new "Regulations". Compared with the original "Regulations", 14 articles have been added, 18 articles have been revised, and only one article has been retained. Therefore, it can be said that the content is rich and the changes are huge. This is first reflected in the expansion of the scope of application of the new Regulations to the price monopoly behavior in the field of intellectual property rights and the anti-monopoly review of the concentration of operators in the field of intellectual property rights, which realizes the rules of my country's anti-monopoly system in the field of intellectual property rights. The full coverage of the three types of monopoly behavior is consistent with the provisions of the new anti-monopoly law.

In terms of monopoly agreements, Article 6 of the new "Regulations" clearly states that "operators shall not use the exercise of intellectual property rights to reach monopoly agreements prohibited by Article 17 and Article 18 (1) of the Anti Monopoly Law." "Operators shall not use the exercise of intellectual property rights to organize other operators to reach monopoly agreements or provide substantive assistance for other operators to reach monopoly agreements." "If operators can prove that the agreement reached falls under the circumstances stipulated in Article 20 of the Anti Monopoly Law, the provisions of the first and second paragraphs shall not apply."

In terms of abusing market position, not only does Article 8 (3) add provisions to "determine whether operators with intellectual property rights have a dominant position in the relevant market, but they can also consider the possibility and transfer costs of trading counterparties turning to technology or products with substitution relationships in the relevant market, the degree of dependence of downstream markets on the goods provided by utilizing intellectual property rights, and the balancing ability of trading counterparties against operators." In addition, the newly added Article 9 specifically stipulates unfair high price behavior, that "operators with market dominant status shall not license intellectual property rights or sell products containing intellectual property rights at unfair high prices during the exercise of intellectual property rights, and exclude or restrict competition." Price related content has also been added in other relevant provisions.

In terms of concentration of operators, special provisions have been made in the newly added Articles 15 and 16. If the concentration of operators involving intellectual property rights in the former clearly meets the declaration standards set by the State Council, operators shall declare to the State Administration for Market Regulation in advance. Concentration shall not be implemented before declaration or approval is obtained after declaration; The latter clearly states that the examination of concentration of operators involving intellectual property rights should take into account the factors stipulated in Article 33 of the Anti Monopoly Law and the characteristics of intellectual property rights, and stipulates several specific situations that can be included in the additional restrictive conditions based on the specific circumstances of concentration transactions involving intellectual property rights.

The changes in the new regulations are also reflected in their emphasis on coordinating with the Guidelines in terms of specific rules. For example, in the second paragraph of Article 7, regarding the safety harbor of vertical monopoly agreements added to the new anti-monopoly law, on the one hand, it is clear that the operator can use the exercise of intellectual property rights to reach an agreement with the counterparty. If the operator can prove that the market share of the operator participating in the agreement in the relevant market is lower than the standards set by the State Administration for Market Regulation and meets other conditions set by the State Administration for Market Regulation, it shall not be prohibited; On the other hand, it is stipulated that specific standards can refer to the relevant provisions of the Anti Monopoly Guidelines of the State Council's Anti Monopoly Commission on Intellectual Property. For example, Article 10 of the new "Regulations" is consistent with the relevant provisions of Article 16 of the "Guidelines" when it comes to the rule of refusal to license intellectual property rights.

3. new Regulations have realized the refinement and further improvement of the content of the rules of the anti-monopoly system in the field of intellectual property in China.

As one of the supporting regulations of the new anti-monopoly law, the new regulations reflect the important changes in the rules of the new anti-monopoly law system in many aspects, especially in the implementation of the legislative purpose of encouraging innovation, the rules of the digital economy, the relevant provisions of the hub and spoke agreement and the improvement of legal liability. At the same time, the relevant rules have been further refined and improved according to the nature and characteristics of intellectual property rights, and the relevant rules have been supplemented and improved in view of the outstanding problems faced in anti-monopoly law enforcement in recent years.

Although there are not many typical antitrust cases in the field of intellectual property, in recent years, China's antitrust enforcement agencies have still investigated and dealt with some monopolistic behaviors related to intellectual property, and some difficult issues worth paying attention to have emerged. For example, how to accurately identify the abuse of essential patents related to standards, how to refine the criteria for identifying unfair and high priced behaviors in the field of intellectual property, and how to improve and refine the anti-monopoly regulatory rules for patent joint management organizations. This has also become a key issue to be addressed and addressed in the new regulations. Therefore, firstly, Article 17 has been revised and improved to include specific provisions on monopoly agreements and abuse of market dominance in patent consortia; The second is to establish two separate rules for monopolistic agreements in standard formulation and implementation, as well as for the abuse of market dominance in standard essential patent licensing; Thirdly, Article 21 has added anti-monopoly provisions related to copyright and related rights.

A very typical and complex issue in the current field of intellectual property antitrust is the antitrust issue involving standard essential patents. The typical behaviors related to the abuse of market dominance in SEP can be divided into two categories: one is the behavior of patent holders who violate their patent information disclosure obligations or make false promises to obtain unfair benefits during the standard setting process; Another type is when patent holders violate the principles of fairness, reasonableness, and non discrimination during the implementation of standards, engaging in behaviors such as refusal of licenses, unfair high prices, price discrimination, bundling, and unjustly seeking injunctive relief. Among them, issues related to injunction relief are particularly complex and controversial. On the basis of extensive solicitation of opinions, Article 19 (1) (3) of the new Regulations has added special regulatory provisions to address the strong reflection of the abuse of injunction remedies by rights holders in the field of standard essential patents, clarifying specific applicable requirements. Specifically, operators with a dominant market position are not allowed to violate the principles of fairness, reasonableness, and non discrimination during the standard essential patent licensing process. Without good faith negotiations, they may request the court or other relevant departments to make judgments, rulings, or decisions prohibiting the use of relevant intellectual property rights, forcing the licensee to accept unfair high prices or other unreasonable transaction conditions. This is of great significance for achieving a balance and coordination between the rights holders and implementers of essential patents in order to promote innovation and maintain competition.

In short, the publication and implementation of the new "Regulations" are conducive to the comprehensive implementation of the system and spirit of the new anti-monopoly law, promoting fair competition and innovative development, and accelerating the construction of a unified national market, promoting high-quality development of China's economy.