Anti-monopoly Committee of the State Council, Anti-monopoly Guidelines in Connection with the Abuse of Intellectual Property (Draft for Comments)

(3)        When conducting an analysis of an exercise of intellectual property rights that involves the elimination or restriction of competition, full consideration is to be given to the positive impact of the exercise of such rights on competition and innovation as required by individual cases.

The Draft mainly deals with the following anti-monopoly issues concerning intellectual property:

I.          Intellectual property agreements that could eliminate or restrict competition

1.         grantback

2.         vertical restrictions

3.         joint research and development

4.         patent pools

II.        Abuse of dominant market position involving intellectual property

1.         unfairly high royalties

2.         refusal to license

3.         tie-in sale

4.         setting of unreasonable transaction conditions

5.         discriminatory treatment

III.       Exercise of intellectual property rights involving standard essential patents

1.         charging unfairly high royalties

2.         setting unreasonable transaction conditions

3.         abusing injunctive relief

The refusal to license intellectual property without a legitimate reason by an intellectual property rights holder that has a dominant market position, where the conditions set forth below are both satisfied, could eliminate or restrict competition:

(1)        the refusal to grant licenses could adversely affect the competition or innovation in the relevant market and harm the interests of consumers or the public;  and

(2)        licensing of the intellectual property would not cause harm to the rights holder.

The setting of the following restrictive conditions in a transaction by a rights holder with a dominant market position could eliminate or restrict competition:

(1)        requiring the transaction counterparty to give it an exclusive grantback of its improved technology;

(2)        prohibiting the transaction counterparty from questioning the validity of its intellectual property or instituting an intellectual property infringement action against it;

(3)        restricting the transaction counterparty from using competing goods or technologies;

(4)        asserting rights in respect of expired or invalid intellectual property; or

(5)        prohibiting the transaction counterparty from dealing with third parties, or, in respect of dealings between the transaction counterparty and third parties, imposing restrictions on transaction conditions such as the selection of the counterparty, territory of the transaction.

Related legislation: Provisions for the Prohibition of Acts of Abusing Intellectual Property Rights to Eliminate or Restrict Competition