“Rules of the Administration for Industry and Commerce on Prohibition of Abusing Intellectual Property Rights to Eliminate or Restrict Competition ” will be released soon(“Rules”)

Recently, the antitrust war related to intellectual property is not rare, such as the standards-essential patents dispute between INterDigital Patent Holdings Inc and Huawei, the National Development and Reform Commission launched an investigation on the abuse of market dominance and discriminatory charges alleged with Qualcomm. Article 55 of Anti-Monopoly Law has stated that it shall be applied in dealing with the activities which abusing intellectual property rights to eliminate or restrict competition, however, how to apply it is a question. In view of this, SAIC drafted “Rules” for public comments until 10 July, which will be released soon. “Rules” mainly includes:

Business operators shall not reach monopoly agreements in the course of exercising IPRs. It means that monopoly agreements during the exercise of IPR are prohibited, except the situation that the safe harbor rule shall be applied.

A business operator that has dominant market position shall not abuse dominant market position in the course of exercising IPRs to eliminate or restrict the competition, such as refusing to license other business operators to use its IP, restricting transition, engaging in bundling activities, imposing the unreasonably restrictive conditions, discriminatory treatment and etc.

To stipulate 4 typical activities which may be deemed as monopoly, including: eliminating or restricting competition through patent pooling arrangements, by using the standards-essential patents, copyright collective management organizations, and abusing in issuing warning letters.

None-capping liability. For example, where business operators abuse IPRs to eliminate or restrict competition in the form of abusive market dominance, the AIC authorities shall order them to cease violations, confiscate illegal gains, and impose a fine of 1 to 10 percent of the sales revenue of the preceding calendar year.