Foreign Investment Bulletin December, 2015（II）

3、The NDRC published the IPR Guidelines
On December 31, 2015, the NDRC published the IPR Guidelines, which explain the definition of relevant markets and determination of dominant market positions in the context of anti-monopoly law enforcement in the domain of IPR, enumerate with respect to seven types of IPR agreements the factors which may be considered when determining whether competition is excluded or restrained in concrete cases, provide the criteria for the presumption of applicability of the exemption under Article 15 of the Anti-monopoly Law, and enumerate with respect to six types of conducts involving IPR the factors which may be considered when determining an abuse of a dominant market position.
Background
In 2015, the NDRC engaged in the drafting of six anti-monopoly guidelines pursuant to the delegation in Article 9 of the Anti-monopoly Law and the work plan of the Anti-monopoly Committee of the State Council. The IPR Guidelines are one of the six guidelines.
The State Administration for Industry and Commerce (“SAIC”) promulgated the Provisions on Prohibiting the Abuse of Intellectual Property Rights to Exclude and Restrain Competition (“IPR Provisions”) on April 7, 2015 (effective on August 1, 2015). However, since the responsibilities of the SAIC regarding anti-monopoly do not cover law enforcement with respect to price-related monopolistic activities, the IPR Provisions do not apply to such activities. The IPR Provisions also stopped short of explaining the various factors which may be considered when determining a violation of the Anti-monopoly Law with respect to different types of IPR agreements and abuses of dominant market positions. The IPR Guidelines issued by the NDRC cover price-related monopolistic conducts and specify in detail the factors to be considered in determining monopolistic activities in the domain of IPR.
Legal Review
The IPR Guidelines have a broader scope than the IPR Provisions as the IPR Guidelines cover price-related monopolistic activities. The IPR Guidelines are also more detailed than the IPR Provisions in that the IPR Guidelines provide particular explanations for different types of agreements and activities.
a. Market definition and dominant market positions
With respect to the definition of relevant markets, the IPR Guidelines emphasize that the relevant technology markets of the IPR should be considered in addition to the relevant product markets of the products in which the IPR are utilized. With respect to the determination of dominant market positions, in addition to restating the principle that ownership of IPR alone does not constitute a dominant market position, the IPR Guidelines further enumerate the factors which may be considered when determining dominant market positions in cases involving IPR and also enumerate the factors which may be further considered where standard-essential patents are involved.
b. Price-related monopolistic activities
With respect to price-related monopolistic activities, before the issuance of the IPR Guidelines, the relevant legal provisions were unclear as to whether the provisions on fixing resale prices or setting minimum resale prices in the Anti-monopoly Law shall be applied to IPR agreements that restrict the prices which the licensee may sell the products in which the IPR are utilized; the IPR Guidelines expressly stipulate that the provisions on fixing resale prices or setting minimum resale prices in the Anti-monopoly Law shall apply to such activities.
c. IPR agreements that might exclude or restrain competition
The IPR Guidelines separately discuss seven types of IPR agreements: (i) joint Research and Development, (ii) patent pool, (iii) cross-licensing, (iv) formulation of standards, (v) exclusive grant-back, (vi) no-challenge clause, and (vii) agreements that confine the use of IPR by a licensee to a particular field, that restrict the quantities, sales channels, sales scope or transaction counterparties of the products whose production or sale involve the use of IPR, that prohibit a licensee from obtaining a license of competitive IPR from a third party or using such competitive IPR, or that prohibit a licensee from producing or selling products that compete against the products of the licensor. For each type of agreement, the IPR Guidelines enumerate the factors which may be considered when determining whether competition is excluded or restrained.
d. Agreements presumed to be exempted
According to the IPR Provisions, so long as the relevant agreement does not belong to any kind of monopolistic agreement enumerated in Articles 13 and 14 of the Anti-monopoly Law, an agreement may be deemed as not monopolistic if its parties compete against each other and together possess a market share of no more than 20% in the relevant market or if its parties are trading counterparties and each possesses a market share of no more than 30% in its respective market. The IPR Guidelines adopt higher criteria for an agreement to enjoy a presumption of exemption; it is stipulated that an agreement is presumed to be exempted under Article 15 of the Anti-monopoly Law if its parties compete against each other and together possess a market share of no more than 15% in the relevant market, or if its parties do not compete against each other and each possesses a market share of no more than 25% in its respective market.
e. Abuses of dominant market positions
The IPR Guidelines separately discussed six types of abuses of dominant market positions: (i) licensing at unfairly high prices, (ii) refusal to grant licensing, (iii) tying, (iv) imposing unreasonable transaction terms, (v) discriminatory treatment, and (vi) coercion by an owner of standard-essential patents upon a licensee by means of injunctive relief. For each type of abuses, the IPR Guidelines enumerate the factors which may be considered when determining whether there is an abuse of a dominant market position.
Next Step
The published IPR Guidelines contain a chapter heading of “IPR Involved Concentration of Business Operators”, but the content of that chapter is not published. It is worth our continued attention as to what provisions pertaining to concentration will be in the IPR Guidelines that will be eventually implemented.
Moreover, in terms of the hierarchy of legislations, the IPR Guidelines are merely a normative document the NDRC promulgates pursuant to the Anti-monopoly Law, and the IPR Guidelines are not entirely consistent with the IPR Provisions, which the SAIC previously promulgated. We shall pay attention to whether there will be a certain level of tension between the two anti-monopoly law enforcement departments when they separately enforce the law against monopolistic activities that abuse IPR in the future.