A Vital Supreme People's Court Decision for IP Rights Holders in China

Summary

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• In a lengthy reasoned judgment in the case of re Yangtze River Pharma et al. v HIPI Pharma, the Supreme People's Court ruled on three IP-related or novel antitrust issues
• The court also flagged the risk of erroneously interfering prices of patented or innovative products, and set out a three-step analytical approach to minimize the risk of misjudgement in this regard
• The intersections between IPR and antitrust law are difficult areas, and China's top court is clearly making efforts to clarify important issues
• This judgment gives IPR holders a clearer framework to assess their practices and build up antitrust safeguards

One year after China's Anti-Monopoly Law ("AML") was amended, the Supreme People's Court ("SPC") handed down its long-awaited landmark judgment on the intersection of intellectual property ("IP") and antitrust in Yangtze River Pharma et al. v HIPI Pharma et al. In this landmark case, the SPC overturned the lower court's decision in its entirety, including damage awards of over RMB 68.3 million, and rejected all claims of the plaintiffs.

In its judgment, while striking a delicate balance between IP rights ("IPR") protection and antitrust enforcement, the SPC makes the important distinction between lawful exercise of IPRs and abuse of market dominance, highlights the importance of preserving innovation incentives when deciding whether to intervene in the pricing of patented products from an antitrust perspective, and establishes a comprehensive analytical framework for various abusive conducts. Importantly, this judgment provides clear pathways for IPR holders to defend their IP-related practices in China and has been well received by patent holders and other innovative companies both inside and outside of China.