反垄断法视野下的标准必要专利

SEP Under Antitrust Law
Standard Essential Patent Under the Context of Antitrust Law Perspective, written by Mr. Hongbin ZHANG, a partner with Global Law Office.
A. The general background: Over-deterrence rather than under-deterrence should be the primary concern for exclusionary conduct by a single, dominant company.
When we talk about SEP under the antitrust law perspective, in most cases, we are referring to the question that whether the extremely high or discriminatory royalties or refusal to license of SEP should constitute violation of antitrust law. These conducts could be generally labeled as exclusionary conducts by a single, dominant company.
For almost half a century since the rise of Chicago School, the antitrust law had been struggling between the concern of over-deterrence and under-deterrence. Nowadays, it appears that the mainstream view would be that over-deterrence must be prior to under-deterrence especially when considering exclusionary conducts by a single and dominant company (the perfect example is SEP we are discussing today). For example, in Trinko case, Justice Scalia cautioned, “Applying the requirement of Section 2 (namely, exclusionary conduct) can be difficult because the means of illicit exclusion, like the means of legitimate competition, are myriad. Mistaken inferences and the resulting false condemnations are especially costly, because they chill the very conduct the antitrust laws are designed to protect.”
B. Following this general background: Injury to competition instead of merely injury to a specific competitor should be required for SEP holder to incur violation of antitrust law.
The US antitrust law has long held that horizontal conspiracy is perse illegal while vertical exclusion is subject to rule-of-reason analysis, because the former always results in more loss of economic social welfare. (e.g., in the US v. Apple, the court states that, “Horizontal price-fixing conspiracies traditionally have been, and remain, the archetypal example of a per se unlawful restraint on trade. By contrast, the Supreme Court in recent years has clarified that vertical restraints should generally be subject to the rule of reason.”)
Under the PRC Anti-monopoly Law, I understand that the injury to competition must be a prong required for constituting violation of antitrust law as well. For example, in the Shanghai Johnson and Johnson case, the Shanghai Higher Court holds the opinions that in determining the horizontal agreement or vertical agreement prohibited by Article 13 or Article 14 of the Anti-monopoly Law, injury to competition must be proved.
According to the Jonson case which requires injury to competition as a prong for condemning horizontal or vertical agreements, we must conclude accordingly that in determining abuse of dominant position by a SEP holder, injury to competition should be a required prongas well.
C. Establishing injury to competition instead of merely injury to a specific competitor by a SEP holder demands a higher threshold. A two-step test can be very helpful, namely, raising rival’s cost test and gaining power to raise price test.
This two-step test was first introduced by a post Chicago School economist, Professor Steven Salop. According to this two-step test, in measuring injury to competition by a SEP holder, the first step is to ask whether one or more downstream rivals’ cost has been raised, if yes, then the second step is to ask whether after raising rivals’ cost, the remaining unaffected rivalscould gain power to raise price.
Respecting the first step asking whether rivals’ cost has been raised, breach of FRAND commitment may substantially raise rivals’ expected cost, and thus from economic view, breach of FRAND commitment may play a very important role in the first step because it serves a base-line in measuring the downstream rivals’ cost. In other words, if the SEP holder is not subject to any FRAND commitment, one may find very hard to prove that a downstream rivals’ cost could be raised by a later refusal to license or charging high royalties, because of lack of a base-line marked by FRAND commitment.
Respecting the second step asking whetherthe remaining unaffected rivalscould gain power to raise price, it is advisable to calculate the market share in aggregate of those adversely affected rivals. More market shares always mean being more likely to injure competition (e.g., in the Microsoft case, the court notes that “‘Substantial share’ has been quantified as foreclosure of 40% to 50% of the relevant market.)
Besides, if the adversely affected rival plays a maverick role in the relevant market, then punishment of such maverick by upstream SEP holder may be also very likely to injure competition, even though in such event the total market shares foreclosed may be not so high. For example, in the Huawei v. Inter-digital, I think it would be very helpful on the part of Huawei to tell its maverick and innovation story in the global cell-phone market before the court.
D. Conclusion
1) Under the primary over-deterrence concern, injury to competition instead of merely injury to a specific competitor should be required for SEP holder to incur condemnations by abuse of dominant market position; in other words, by requiring proof of injury to competition, the antitrust law should set up a relatively strict threshold for condemning a SEP holder.
2) In establishing injury to competition, the two-step test of raising rivals’ cost and gaining power to raise price is very helpful. According to such two-step test,
a. breach of FRAND commitment must be required first; in other words, if no FRAND commitment previously made, it should be extremely hard to establish abuse of dominant position by a SEP holder;
b. the market shares foreclosed or the maverick nature of one or more adversely affected rivals is quite relevant in establishing injury to competition; and
c.on the part of plaintiff or antitrust governmental agency, merely establishing price-discrimination or refusal to license with a specific rival is far from establishing antitrust liability, because they are of injury to a specific rival but not qualified alone to prove injury to competition. It is also noteworthy that price-discrimination or refusal to license does not necessarily result in injury to competition, and under normal circumstances, for a SEP holder price-discrimination or refusal to license could enhance economic efficiencies and may contribute to secure the sufficient incentive to stimulate innovations.