Provisions of the State Administration for Industry and Commerce on Prohibiting the Abuse of Intellectual Property Rights to Preclude or Restrict Competition (“Provisions”) will come into force on August 1, 2015.

The abuse of IPR to preclude or restrict competition is a hot topic in the recent years, such actions go against the legislative purpose on the protection of IPR, which could also bring the monopoly problems. Under such circumstance, “Provisions” has been issued on 7th Apr. 2015, which prohibits the business operator that has a dominant market position to abuse its dominant market position to preclude or restrict competition in the course of exercising IPR. The main content of “Provisions” includes:

To define the definition of “abuse of IPR to preclude or restrict competition”, which says that a business operator’s exercise of IPR in violation of the Anti-Monopoly Law to implement a monopolistic agreement, abuse its dominant market position, or commit any other monopolistic conduct.

The business operators should not enter into a monopolistic agreement by exercising IPR, except 2 circumstances which shall be accepted according to “safe harbor rules”.

A business operator with a dominant market position shall not abuse its dominant market position in exercising IPR, including:

without any justification, refuse to license other business operators to use its IPR under reasonable conditions;

without any justification, impose the restrictions on transactions;

without any justification, attach the unreasonable restrictions, such as prohibit the counter party to call into question on the validation of the IPR;

without any justification, treat the counter parties with the same conditions differently.

To clarify the specific situations that might be deemed as monopoly in exercising the patent pooling and patent standardization.

To set the punishment on the abuse of IPR to preclude or restrict competition in accordance with the punishment criterion as stipulated in “Anti-monopoly Law”, which says “confiscate the illegal gains, and impose a fine of 1% up to 10% of the total sales amount made in the previous year.”