The amended Provisions on Prohibiting the Abuse of Intellectual Property Rights to Exclude or Restrict Competition (hereinafter referred to as the 'Provisions') published by China's State Administration for Market Regulation (“SAMR”) has come into force from August 1, 2023. The purpose of the amendments is to encourage innovation, to maintain the market order of fair competition in the field of intellectual property, and to contribute to the construction of a unified national market, according to the SAMR.
The Provisions strike to balance the protection of intellectual property and the maintenance of fair competition order, by referring to the major and difficult anti-monopoly issues in the field of intellectual property, for the purpose of strengthening the guidance of rules, and promoting fair competition and innovative development. Compared with the Provisions on Prohibiting the Abuse of Intellectual Property Rights to Exclude or Restrict Competition formulated in 2015, amendments have been made in the following aspects:
Expanding the coverage of the "abuse of intellectual property rights to exclude or restrict competition"
Three types of monopolistic acts, that is, exercise of intellectual property rights to reach monopoly agreements, abusing a dominant market position, and carrying out concentration of undertakings, which have or may have the effect of excluding or restricting competition, are included in the scope of regulation.
Refining the provisions for determining monopolistic acts by exercise of intellectual property rights
In accordance with the Anti-Monopoly Law revised in 2022 and taking into account the characteristics of intellectual property rights and the actual regulatory reality, the definition of relevant markets, the determination and presumption of market dominance, the determination of relevant monopolistic acts, the considerations for review of the concentration of undertakings, and the specific types of additional restrictive conditions are all improved and refined in the Provisions, so as to enhance the guidance and operability of the thereof.
Strengthening the regulation of certain typical and special monopolistic acts in the field of intellectual property
For example, the Provisions refines the relevant provisions on patent pooling, prohibiting the entities and members of patent pooling from using patent pool to engage in monopolistic acts. It also strengthens the regulation of monopolistic acts in the process of formulating and implementing standards, prohibiting operators with a dominant market position from using standard-essential patents to carry out "patent hostage".
The Provisions reflects the latest approaches of China authorities to manage the relationship between competition law and intellectual property enforcement:
- It takes into account strengthening the anti-monopoly supervision and protecting intellectual property rights. Intellectual property rights and antitrust regimes are purposefully aligned in protecting fair competition and promoting innovative development. Intellectual property rights should be exercised within a reasonable scope in accordance with the law, and once they exceed reasonable limits, they will harm fair competition and innovation in the market. By clarifying the boundaries between private rights and public interest protection, between industry and competition supervision, it effectively prevents and stops the abuse of intellectual property rights to exclude or restrict competition, and promotes the orderly flow and efficient allocation of market resources and innovation factors.
- It takes into account maintaining fair competition and promoting innovative development. The ultimate goal of protecting fair competition in the market is to promote innovative development. To strengthen anti-monopoly supervision and enforcement in the field of intellectual property, it is necessary to correctly handle the relationship between development and regulation, efficiency and fairness, vitality and order. It focuses on improving the stability, pertinence and forward-looking nature of the anti-monopoly system in the field of intellectual property, and provides a more specific and comprehensive regulatory basis for anti-monopoly supervision and law enforcement. It effectively guides and regulates market competition in the field of intellectual property, maintain fair competition market order, and create a market environment conducive to innovation and development.
- It takes into account the development interests of intellectual property rights holders and implementers. Both IP right holders and implementers are the main subjects that promote innovation and development. To strengthen anti-monopoly supervision and law enforcement in the field of intellectual property, it is necessary to consider the development interests of intellectual property rights holders and implementers in the process of fully stimulating the innovation vitality of intellectual property in the whole society.
The promulgation and implementation of the amended Provisions is conducive to fully implementing the system and spirit of the new Anti-Monopoly Law, promoting fair competition and innovative development, thereby accelerating the construction of a unified national market and promoting the high-quality development of China's economy.