Antimonopoly Directive Restrict Intellectual Property

The Anti-Monopoly Bureau of China’s State Administration for Market Regulation (SAMR) has published the Anti-Monopoly Guidelines on Intellectual Property Rights (“IPR Guidelines”). This long-awaited Directive aims to prohibit the use of intellectual property rights if they eliminate or restrict competition. The Guidelines also provide clearer rules and guidance on monopoly of intellectual property rights.

Chinese courts prefer to consider the impact of IPR on innovation, research and development. For example, in a case Huawei v. IDC, the Supreme People’s Court of Guangdong found that IDC had abused its dominant position in relation to the licensing of standard essential patents (SEP) for 3G wireless communication devices. IDC is obliged to stop the infringement and compensate the injured parties for economic losses. In 2017, the Becton, Dickinson Company merger deal with C. R. Bard, Inc., aiming to develop a new type of coarse needle biopsy device. The Ministry of Commerce (MOFCOM) thinks that the merger deal will have negative impact on the technological progress of China. Therefore, MOFCOM decided that the whole coarse needle biopsy device R&D line, including some IP rights and employees, had to be separated.

The IP Guidelines are the first anti-monopoly guidelines for intellectual property in China. They ensure that Chinese law enforcement agencies are actively involved in resolving IP-related anti-monopoly activities. Patent monopoly cases often occur in high-tech companies, so they should take the risk of monopoly into account in their daily operations. On the one hand, they must be careful not to create a patent monopoly themselves and to break the law. On the other hand, they must also recognize whether they are facing an opposing patent monopoly and enforce their rights.

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