Publish Time:2022-08-08 10:50 Extract From:https://www.samr.gov.cn/hd/zjdc/202206/t20220627_348161.html
Release of the “Regulations on Prohibition of Abuse of Intellectual Property to Eliminate or Restrict Competition (Draft for Comments)” by the State Administration for Market Regulation
In order to implement the revised “Anti-Monopoly Law”, which came into force on August 1, 2022, the State Administration for Market Regulation revised the “Regulations on Prohibition of Abuse of Intellectual Property to Eliminate or Restrict Competition” (hereinafter referred to as “Regulations”), formed an exposure draft, and made it open for public consultation.
The revised “Regulations” has a total of 28 articles, and the main revisions include:
(1) The name of the regulations is revised. The name of the regulations is modified to “Regulations on Prohibition of Abuse of Intellectual Property to Eliminate or Restrict Competition”.
(2) The latest system provisions of the revised Anti-Monopoly Law shall be implemented. The regulations of the revised Anti-Monopoly Law shall be accurately grasped and fully implemented, combining with the anti-monopoly practice in the field of intellectual property. Firstly, to implement the legislative purpose of encouraging innovation, “incentivizing innovation” is amended to “encouraging innovation” (Article 1), and provisions on “innovation (R&D) market” are added (Article 4). Secondly, the provision that “business operators shall not use the method of exercising intellectual property rights to organize other business operators to reach a monopoly agreement or provide substantial assistance for other business operators to reach a monopoly agreement” is added (Article 5). Thirdly, legal liabilities shall be strengthened and legal liabilities clauses are revised (Articles 21 to 26).
(3) The rules of anti-monopoly system in the field of intellectual property shall be improved and completed. The basic system of the Anti-Monopoly Law shall be implemented, and its relationship with other anti-monopoly rules and guidelines shall be handled properly. Firstly, it is clarified that the monopolistic acts in the field of intellectual property include reaching monopoly agreements, abuse of dominant market position, and concentration of business operators which have or may have an effect of eliminating or restricting competition (Article 3). Secondly, to refine the rules and regulations on the abuse of the dominant market position in the field of intellectual property, the factors to be considered in determining the dominant market position are added (Article 6), and the rules for the determination of acts such as restricting transactions, bundle sale, and imposing unreasonable restrictions are improved (Articles 8 to 10). Thirdly, the specific provisions on the declaration, examination and additional restrictive conditions of the concentration of business operators involved in intellectual property are added (Articles 12 and 13).
(4) The anti-monopoly rules in key areas such as standard-essential patents are improved. It shall actively respond to the key and difficult issues of anti-monopoly in the field of intellectual property, complete and refine the rules and regulations, and strengthen the regulations to be forward-looking, targeted, and effective. Firstly, the provisions on monopoly agreements of the patent pool and the abuse of the dominant market position are improved (Article 14). Secondly, the situation of monopoly agreements in standard formulation and implementation is clarified, and the provisions on the abuse of the dominant market position in the standard-essential patent licensing are improved (Articles 15 and 16). Thirdly, the provisions on the monopoly acts of copyright collective management organizations are added (Article 17).
Regulations on Prohibition of Abuse of Intellectual Property to Eliminate or Restrict Competition (Draft for Comments)
Article 1 In order to protect fair market competition, encourage innovation, and prevent and stop business operators from abusing intellectual property to eliminate or restrict competition, these Regulations are formulated in accordance with the “Anti-Monopoly Law of the People's Republic of China” (hereinafter referred to as the “Anti-Monopoly Law”).
Article 2 Anti-monopoly and protection of intellectual property share common goals, namely, to promote competition and innovation, raise economic efficiency, and safeguard the interests of consumers and the public.
The “Anti-Monopoly Law” shall not apply to the exercise of intellectual property by business operators pursuant to the relevant laws and administrative regulations on intellectual property; however, the “Anti-Monopoly Law” shall apply to the abuse of intellectual property by business operators to eliminate or restrict competition.
Article 3 The term “acts of abuse of intellectual property to eliminate or restrict competition” as mentioned in these Regulations refers to the monopoly acts including the exercise of intellectual property by business operators in violation of the provisions of the “Anti-Monopoly Law”, reaching monopoly agreements, abuse of their dominant market position, and concentration of business operators which has or may have an effect of eliminating or restricting competition.
Article 4 The term “relevant market” as mentioned in these Regulations, including the relevant commodity market and relevant regional market, shall be defined in accordance with the “Anti-Monopoly Law” and the “Guidelines of the Anti-Monopoly Commission of the State Council on Defining Relevant Markets”.
In anti-monopoly enforcement work involving intellectual property licensing, etc., the relevant commodity market may be the technology market, the product market with specific intellectual property rights, or the innovation (R&D) market.
The related technology market refers to the market composed of a group or a class of technologies with a relatively close substitution relationship. The related innovation (R&D) market refers to the market formed by the competition among business operators for the research and development of new technologies or new products in the future.
Article 5 Business operators shall not reach monopoly agreements prohibited by Article 17 and Clause 1 of Article 18 of the “Anti-Monopoly Law” by exercising intellectual property rights.
Business operators shall not use the method of exercising intellectual property rights to organize other operators to reach a monopoly agreement or provide substantial assistance for other operators to reach a monopoly agreement.
If the Business operators can prove that the agreement reached conforms to the provisions of Article 20 of the “Anti-Monopoly Law”, the provisions of Clause 1 and Clause 2 of Article 5 shall not apply.
Article 6 Business operators which hold dominant market position shall not abuse their dominant market position to eliminate or restrict competition in the process of exercising intellectual property rights.
The dominant market position is determined and presumed in accordance with the provisions of the “Anti-Monopoly Law” and the “Regulations on Prohibition of Abuse of Dominant Market Position”. The possession of intellectual property rights by business operators may constitute one of the factors for determining their dominant market position, but it cannot be presumed that the business operators have the dominant market position in the relevant market solely based on the fact that the business operators possess intellectual property rights.
To determine that business operators in the field of intellectual property have the dominant market position, factors such as the substitutability of intellectual property rights, the dependence of the downstream market on the commodities provided by the use of intellectual property, and the ability of trading counterparts to check and balance the operator can be considered.
Article 7 Business operators which hold dominant market position shall not, without a valid reason, refuse to license other business operators to use the intellectual property rights under reasonable conditions to eliminate or restrict competition when their intellectual property rights constitute necessary facilities for production and operation activities.
The following factors shall be considered to determine the acts in the preceding clause:
1. the intellectual property right cannot be reasonably substituted in the relevant market and is necessary for other business operators to participate in the competition in the relevant market;
2. the refusal to license the intellectual property rights may adversely affect competition or innovation in the relevant market, and damage the interests of consumers or the public; and
3. licensing the intellectual property will not cause unreasonable damage to the business operators.
Article 8 Business operators which hold dominant market position shall not, without a valid reason, implement the following acts of restricting transactions to eliminate or restrict competition in the process of exercising intellectual property rights:
1. restrict trading counterparts to transact only with the business operator;
2. restrict trading counterparts to transact only with designated business operators; and
3. restrict trading counterparts from transacting with specific business operators.
Article 9 Business operators which hold dominant market position shall not, without a valid reason, violate trading practices, consumption habits, etc., or ignore the functions of commodities to implement the following acts of bundle sale so as to eliminate or restrict competition in the process of exercising intellectual property rights:
1. force the licensee to purchase other unnecessary commodities when licensing the intellectual property; and
2. force the licensee to accept a package of licenses when licensing intellectual property rights.
Article 10 Business operators which hold dominant market position shall not, without a valid reason, implement the following acts of imposition of unreasonable restrictive conditions to eliminate or restrict competition in the process of exercising intellectual property rights:
1. require trading counterparts to conduct a sole grand-back or exclusive grand-back about their improved technology;
2. prohibit trading counterparts from questioning the validity of their intellectual property rights;
3. restrict trading counterparts to use competitive commodities or technologies without infringing intellectual property rights after the term of the license agreement expires;
4. continue to exercise the rights over the intellectual property rights whose protection period has expired or has been found to be invalid;
5. prohibit trading counterparts to conduct transactions with third parties; and
6. impose other unreasonable restrictive conditions on the trading counterparts.
Article 11 Business operators which hold dominant market position shall not, without a valid reason, implement differential treatment for trading counterparts with the same conditions in the process of exercising intellectual property rights to eliminate or restrict competition.
Article 12 Business operators who acquire the controlling stake in other operators or can exert decisive influence over other business operators through transactions involving intellectual property rights, which constitutes a concentration of business operators, shall make a declaration in accordance with the “Anti-Monopoly Law” and the “Regulations of the State Council on the Declaration Standards for Concentration of Business Operators”, where the declaration has not been made, such concentration shall not be implemented.
Article 13 If an arrangement involving the intellectual property rights of the business operators is a substantial part of the concentrated transaction or is of great significance to the realization of the purpose of the transaction, in the process of examining such arrangement, the State Administration for Market Regulation shall take into account the factors specified in Article 33 of the “Anti-Monopoly Law”, as well as the circumstances and characteristics of intellectual property rights transfer and licensing.
The restrictive conditions for the concentration of business operators involving intellectual property rights include the following situations:
1. divest intellectual property rights or the business involved in intellectual property rights;
2. maintain the independent operation of intellectual property-related businesses;
3. license intellectual property rights on reasonable conditions; and
4. other restrictive conditions.
Article 14 Business operators shall not use the patent pool to eliminate or restrict competition in the process of exercising intellectual property rights.
The members of the patent pool shall not use the patent pool to exchange sensitive information on competition, such as price, output, and market division to reach monopoly agreements prohibited by Articles 17, Clause 1 of Article 18, and Article 19 of the “Anti-Monopoly Law”, unless the business operators can prove that the agreement reached is in compliance with the provisions of Article 20 of the “Anti-Monopoly Law”.
A patent pool entity with dominant market position shall not use the patent pool to exercise the following acts of abuse of the dominant market position to eliminate or restrict competition:
1. license the patent pool with unfairly high price;
2. restrict the patent pool members from licensing patents outside the patent pool as independent licensor without a valid reason;
3. restrict the patent pool members or licensees to independently or jointly with third parties to develop technologies that compete with patent pool without a valid reason;
4. force the licensee to solely or exclusively grant back their improved or developed technology to the patent pool entity or patent pool members without a valid reason;
5. prohibit the licensee from questioning the validity of the patents in the patent pool without a valid reason;
6. implement differential treatment in terms of transaction conditions for patent pool members with the same conditions or licensees in the same relevant market without a valid reason; and
7. other acts of abuse of the dominant market position determined by the State Administration for Market Regulation.
Article 15 Business operators shall not use the formulation and implementation of standards to engage in the following acts to eliminate or restrict competitions in the process of exercising intellectual property rights:
1. cooperate with business operators having a competitive relationship to exclude specific business operators from participating in standard formulation, or exclude relevant standard technical solutions of specific business operators without a valid reason;
2. exclude other specific business operators from implementing relevant standards jointly with business operators having a competitive relationship without a valid reason;
3. agree with business operators having a competitive relationship not to implement other competitive standards; and
4. other monopoly agreements identified by the State Administration for Market Regulation.
Article 16 Business operators which hold dominant market position shall not engage in the following acts during the formulation and implementation of standards to eliminate or restrict competition:
1. in the process of participating in standard formulation, deliberately fail to disclose their rights information to a standards formulation organization or explicitly waive their rights, but claim their patent right to the implementer of a certain standard after the standard involves the patent;
2. after their patents become standard-essential patents, violating the promise of fair, reasonable and non-discriminatory licensing, license at an unfairly high price, refuse licenses without due cause, make a bundled sale, implement differential treatments, or impose other unreasonable restrictions;
3. in the process of licensing standard-essential patents, violating the promise of fair, reasonable and non-discriminatory licensing, without a good faith negotiation procedure, improperly request a court or relevant department to make or issue a judgment, ruling or decision prohibiting the use of relevant intellectual property rights, forcing the licensee to accept their unfairly high price or other unreasonable restrictions; and
4. other acts of abuse of the dominant market position determined by the State Administration for Market Regulation.
The standard-essential patents in these regulations refer to the patents that are essential for the implementation of the standard.
Article 17 Copyright collective management organizations shall not abuse intellectual property rights in the process of carrying out activities to eliminate or restrict competition.
In the relevant agreements reached between copyright collective management organizations and rights holders, users or other copyright collective management organizations, it is not allowed to exchange sensitive information about competition, unreasonably impose restrictions on membership, geographical scope, etc., or jointly boycott specific rights holders or users, etc.
Copyright collective management organizations with the dominant market position shall not implement the following acts of abuse of the dominant market position to eliminate or restrict competition:
1. charge management fees to specific rights holders or charge royalties to specific users at an unfairly high price;
2. refuse specific users to use copyright or copyright-related rights without a valid reason;
3. restrict specific rights holders from joining or withdrawing from the organization without a valid reason;
4. force the user to accept a package of licenses without a valid reason;
5. implement differential treatment to rights holders or users with the same conditions without a valid reason; and
6. other acts of abuse of the dominant market position determined by the State Administration for Market Regulation.
Article 18 If business operators are suspected of abusing intellectual property rights to eliminate or restrict competition, the anti-monopoly law enforcement agency shall conduct investigations in accordance with the “Anti-Monopoly Law”, the “Regulations on Prohibition of Monopoly Agreements”, the “Regulations on Prohibiting Abuse of Dominant Market Position”, and the “Regulations on the Examination of Concentration of Business Operators”.
The anti-monopoly law enforcement agencies referred in these Regulations include the State Administration for Market Regulation and the market supervision and administration departments of all provinces, autonomous regions and municipalities directly under the Central Government.
Article 19 The following steps can be taken to analyze and determine that business operators are suspected of abusing intellectual property rights to eliminate or restrict competition:
1. determine the nature and manifestation of the act of business operators in exercising intellectual property rights;
2. determine the nature of the relationship between business operators exercising intellectual property rights;
3. define the relevant market involved in the exercise of intellectual property rights;
4. determine the market status of business operators exercising intellectual property rights; and
5. analyze the impact of business operators exercising intellectual property rights on relevant market competition.
To analyze and determine the nature of the relationship between business operators, it is necessary to consider the characteristics of the act of exercising intellectual property rights. In the case of intellectual property licensing, the business operators who originally have a competitive relationship are in a transaction relationship in the licensing contract, but in a competitive relationship in a market where both the licensor and the licensee use the intellectual property to produce products. However, if the parties are not in a competitive relationship when the license agreement is concluded, and a competitive relationship arises after the agreement is concluded, it is still not regarded as an agreement between competitors, unless the original agreement is substantially changed.
Article 20 The following factors shall be considered when analyzing and determining the impact of the acts of business operators exercising intellectual property rights on competition:
1. the market status of business operators and trading counterparts;
2. the degree of market concentration of the relevant market;
3. the degree of difficulty of entering the relevant market;
4. the industry norms and development stages of the industry;
5. the time and scope of effectiveness of restrictions in terms of production, regions, consumers, etc.;
6. the influence on promoting innovation and technology;
7. the innovation ability of business operators and the speed of technological change; and
8. other factors related to the determination of the influence of the exercise of intellectual property rights on competition.
Article 21 Where a business operator has abused intellectual property rights to eliminate or restrict competition to constitute a monopoly agreement, the anti-monopoly law enforcement agency shall order the business operator to stop the illegal act and confiscate the illegal income; a fine ranging from 1% to 10% of the sale amount of the preceding year shall be imposed; where there is no sale amount of the preceding year, a fine of not more than RMB 5,000,000 shall be imposed; where a monopoly agreement reached has not been implemented, a fine of not more than RMB 3,000,000 may be imposed. If the legal representative, main responsible person and directly responsible personnel of the business operators are personally responsible for reaching a monopoly agreement, a fine of not more than RMB 1,000,000 may be imposed.
Where business operators organize other business operators to reach a monopoly agreement or provide substantial assistance for other business operators to reach a monopoly agreement by exercising intellectual property rights, the provisions of the preceding paragraph shall apply.
Article 22 Where a business operator’s abuse of intellectual property rights to eliminate or restrict competition constitutes abuse of the dominant market position, the anti-monopoly law enforcement agency shall order the business operator to stop the illegal act, confiscate the illegal income, and impose a fine of not less than 1% but not more than 10% of the sale amount of the preceding year.
Article 23 Where a business operator has abused property rights to illegally implement concentration, and has or may have the effect of eliminating or restricting competition, the State Administration for Market Regulation shall order the business operator to stop implementing concentration, to dispose of shares or assets within a stipulated period or to transfer the business within a stipulated period, and to adopt other necessary measures to reinstate the pre-concentration state, and a fine of not more than 10% of the sale amount of the preceding year shall be imposed; where there is no effect of eliminating or restricting competition, a fine of not more than RMB 5,000,000 shall be imposed.
Article 24 When determining the specific fine amount, the anti-monopoly law enforcement agency shall consider factors such as the nature, circumstances, extent, duration, and situations after eliminating the consequences of the violation, etc.
Article 25 Where a business operator has abused intellectual property to eliminate or restrict competition, the circumstances are particularly serious, the impact is particularly bad, and the consequences are particularly serious, the State Administration for Market Regulation may determine the specific amount of fines at more than two times but not more than five times the amount of fines stipulated in Article 56, Article 57, Article 58, and Article 62 of the “Anti-Monopoly Law”.
Article 26 Personnel of the anti-monopoly law enforcement agency who are found guilty of abusing their official powers, dereliction of duties, corruption or divulging commercial secrets, personal privacy, and personal information which have come to their knowledge during the enforcement process shall be dealt in accordance with relevant regulations.
Clues of violations of duty or duty-related crimes committed by public officials discovered during the investigation by the anti-monopoly law enforcement agency shall be handed over to the competent inspecting discipline office in time.
Article 27 The State Administration for Market Regulation is responsible for the interpretation of these regulations.
Article 28 These Regulations shall come into force on the date of . The prior “Regulations on Prohibiting the Abuse of Intellectual Property to Eliminate or Restrict Competition” promulgated on April 7, 2015 by Order No. 74 of the State Administration for Industry and Commerce shall be repealed at the same time.
