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On June 30, 2023, the State Administration for Market Regulation (SAMR) issued a draft of the Antimonopoly Guide in the Field of the Standard Essential Patents (the Drafted Guide) to solicit public opinions.
The Drafted Guide contains 20 articles in five chapters with key points including but not limited to as follows:
General Principles
The first Chapter introduces the relevant concepts and important principles of the Guide. For instance, the principles of analyzing whether the standard essential patents (SEP) is excluding or restricting competition are as follows: “(1) Adopting the same regulatory principles as those for the abuse of intellectual property rights and following the relevant provisions of the Antimonopoly Law;(2) Grasping the relationship between intellectual property protection and antitrust, and balancing between protecting intellectual property rights and promoting fair competition in the market;(3) Fully considering the disclosure of information of essential patents, licensing commitments and compliance of licensing negotiations in the process of standard setting and implementation;(4) Protecting the reasonable return of innovation of standard-essential patents and better balancing the interests of standard-essential patent owners and standard implementers.”
This chapter further introduces the principles regarding the relevant market, the information disclosure, license commitment and good faith negotiation of the standard essential patents.
Monopoly Agreements Involving the Standard Essential Patents
The second chapter introduces the recognition of the monopoly agreements that are made during the standard making and implementing process, involving a standard essential patents pool, and so on.
For instance, it provides that “in the process of standards development and implementation, monopoly agreements may be reached between different standard-essential patent owners to exclude and restrict competition, and the following circumstances and factors may be considered in the specific analysis:(1) whether there is no justification to exclude other specific operators from participating in the formulation of standards;(2) whether there is no justification to exclude other specific operators from the relevant program(3) whether there is no justification to agree not to implement other competitive standards(4) whether there is no justification to restrict the implementation of a specific standard implementation party based on the standard to test, obtain certification and other activities to implement the standard.”
Abuse of Market Dominance Position that Involve SEPs
The third chapter introduces factors to be considered when recognizing the abuse of market dominance position that involving the standard essential patents under different circumstances, such as licensing a SEP with unfair high price, refusing to license a SEP, bundle sales that involving a SEP, adding other unreasonable trade conditions that involving a SEP, differential treatment for SEP arrangements, and abusing remedies that involve SEPs.
For instance, when it comes to refusing dealing in an SEP, it provides that “normally, after making a fair, reasonable and non-discriminatory commitment, the standard-essential patent owner shall not refuse any standard implementer willing to obtain a license without justifications, otherwise it may have an exclusionary and restrictive effect on market competition, and the following factors may be considered in the specific analysis:(1) whether the licensing parties to conduct bona fide licensing negotiations in accordance with Article 7 of these Guides;(2) whether the damage of standard-essential patent infringement can be compensated by a license that meets the fair, reasonable and non-discriminatory commitments;(3) whether the standard implementer lacks the ability to pay reasonable license fees, etc;(4) whether the standard implementation party has a bad credit record or deteriorating business conditions, which affects the security of the transaction;(5) whether the standard-essential patents cannot be licensed due to force majeure and other objective reasons;(6) the impact and extent of refusal to license the relevant standard-essential patents on market competition and innovation by the standard implementer;(7) whether the refusal to license the relevant standard-essential patents will harm the interests of consumers or the public interest.”
Concentration of Operators that Involving the SEP
The fourth chapter introduces the report and review of the concentration of operators involving SEPs. For instance, regarding the review of the concentration of operators involving SEP,s it provides that “if a transaction involving standard-essential patents is a substantial part of an operator concentration or is important to the achievement of the purpose of the transaction, the factors specified in the Antimonopoly Law shall be considered during the review process of the operator concentration, taking into account the characteristics of standard-essential patents. Restrictive conditions involving standard-essential patents include structural conditions, behavioral conditions and comprehensive conditions. Additional restrictive conditions involving standard-essential patents are usually determined on a case-by-case basis after evaluating the restrictive condition proposal with respect to the exclusion or restriction of competition effect that the operator concentration has or may have.”
The SAMR has released a series of regulations or guidelines regarding antimonopoly matters for public opinion this year, including but not limited to the Regulation on Review of Fair Competition (Draft for Opinions), the Antimonopoly Guideline on Guilds (Draft for Opinions), and so on. The Drafted Guide herein is one of them, and comments are due by July 29, 2023.