Anti-trust Law with an IP Protection Interface in China An emerging legal area affecting your business Xun Yang 20 September 2016
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Content Legal Framework of Anti-trust Laws with IP Interface Key Concepts in Context of Recent Cases Practical Suggestions for Managing Anti-trust Risks 2 /APAC 5320363
Legal Framework of Anti-trust Law with IP Interface 3 /APAC 5320363
Legal Framework of Anti-trust Law with IP Interface 4 /APAC 5320363
Legal Framework Anti-trust Law Enforcing Bodies Market misbehaviour Price-related misbehaviour AIC NDRC Courts MOFCOM Private suits & Administrative suites Merger control 5 /APAC 5320363
Legal Framework Sources of Law Congressmade legislations PRC Anti-monopoly Law PRC Patent Law PRC Contract Law Judicial Interpretations Several Opinions on Trying Technology-contract Related Disputes (2004) Several Opinions on Trying Patent Infringement Related Disputes (2016) Ministerial Rule SSB & SIPO Administrative Rules on National Standards Concerning Patents (2013) AIC Rules for Prohibition on Abusing IP Rights and Excluding Competitions (2015) AIC Guidance for Enforcing Anti-monopoly Laws against IPR Abuses (Draft) NDRC Guidance for Anti-monopoly Against IPR Abuses (Draft) 6 /APAC 5320363
Legal Framework Named monopolistic activities AML Contract Law Monopolistic agreements Abuses of dominant market position Restrictive clauses in technology contracts Monopolistic agreements between Competitors Vertical monopolistic agreements 7 /APAC 5320363
Legal Framework Relationship between antitrust laws and IP laws Art. 55 of AML It is not a monopolistic act to exercise intellectual property rights, but the PRC Anti-monopoly Law applies to the abuses of intellectual property rights. 8 /APAC 5320363
Key Concepts in Context of Recent Cases 9 /APAC 5320363
Key Concepts in Context of Recent Cases 10 /APAC 5320363
Key Concept Relevant Market (1) Technology market Geographic market Commodity market Innovative market Substitutability 11 /APAC 5320363
Key Concept Relevant Market (2) Determination of relevant market in Suture case Usage Features Geographic scope Bioabsorbable vs Non-bioabsorbable 12 /APAC 5320363
Key Concept Relevant Market (3) Determination of relevant market in Allopurinol case Application Gout Functioning Generation of uric acid Release of uric acid Pain killer Sales targets Covered by insurance Not covered API vs madedrugs (preparations) Allopurinol Benzbromarone Culchincine Febuxostat Import market Licensing requirement 13 /APAC 5320363
Key Concept Relevant Market (3) Determination of relevant market in Qualcomm case Same generation communication standards Different generation communication standards 14 /APAC 5320363
Key Concept Dominant market position Patent & other IP Rights Investment R&D circle Licensing requirement 15 /APAC 5320363
Key Concept Monopolistic agreements (1) Agreements between competitors Agreement between upstream and downstream operators Restrictive clauses in technology contracts Fixing price Market division Restrictions on improvement Limiting on output Boycott Fixing price Setting minimum price Tied sales Restriction on improvements Limitation on usage 16 /APAC 5320363
Key Concept Monopolistic agreements (2) Determination of anti-competition effect in Suture case Competitiveness in market Market position Intention Actual consequence 17 /APAC 5320363
Key Concept Market Abuses (1) Unreasonable royalty Refusal to transact Unreasonable conditions Price discrimination Refusal to license Tied sales Excessive royalty Refusal to supply Grant-back Non-assertion Non-compete 18 /APAC 5320363
Key Concept Market Abuses (2) Determination of unreasonable royalty in IDC case Price discrimination Bundled license Unreasonable royalty Deprival of reasonable profits Requirement to surrender improvements 19 /APAC 5320363
Key Concept Market Abuses (2) Determination of unreasonable royalty in IDC case (Cont d) Bundled license Geographic scope Historical review IP protectable and nonprotectable Essential and non-essential 20 /APAC 5320363
Key Concept Market Abuses (3) Refusal to supply in Allopurinol case Loss of production Refusal to supply Consumer interest Market order 21 /APAC 5320363
Key Concept Market Abuses (5) Compulsory license in Paddy Seed Case Necessity Public interest Equal value Free crosslicense Pollen parent seed + Maternal parent seed 22 /APAC 5320363
Key Concept Unreasonable conditions vs. Restrictive clauses (1) Unreasonable Licensing Conditions Restrictive clauses in technology contracts Legal Ground Anti-monopoly Law Contract Law Judicial interpretation on technology contracts Violative activities Grant-back Tied sales Non-assertion Non-compete Conditions Dominant market position With no legitimate reason Remedies Private remedies Administrative penalties being unreasonable Private remedies 23 /APAC 5320363
Key Concept Unreasonable conditions vs. Restrictive clauses (2) Reasonable ground for tied sales Necessary to implement licensed technology Reasonable ground for grantback Reciprocal Reasonable ground for Noncompete Protecting IPR Necessary to ensure safety Purchase in lieu of license fees Non-impact on competition Ensure efficiency 24 /APAC 5320363
Key Concept IP vs Anti-trust (1) 1927 1928 1929 1939 1941 Now 25 /APAC 5320363
Key Concept IP vs Anti-trust (2) Boundary between exercising of IP rights and monopolistic activities Reasonable Restrictions Monopolistic restrictions Benefiting public interest Increasing competition Natural to IPR Harm to public interest Decreasing competition Extension beyond IPR 26 /APAC 5320363
Practical Suggestions for Managing Anti-trust Risks 27 /APAC 5320363
Practical Suggestions for Managing Anti-trust Risks 28 /APAC 5320363
Practical Suggestions What anti-trust laws mean to a business Business models Litigation strategies Contract terms 29 /APAC 5320363
Practical Suggestions Business models Benefits from sales of components Distributions by geographic scope Is design protected IP used in distribution Is protocol / interface protected Managing after-sales services Sales in lieu of license fee / commercial bribery concerns 30 /APAC 5320363
Practical Suggestions Contract terms Sample One: The Licensee shall not make any modification to the Licensed Technology or use any of such modifications without prior written consent from the Licensor. Sample Two: The Licensee shall not partner any third party to develop any technology in competition with the Licensed Technology. No warranty on modification Right of first refusal Right to verification for safety China wall restriction 31 /APAC 5320363
Practical Suggestions Litigation Strategy As plaintiff As defendant 32 /APAC 5320363
Practical Suggestions Managing anti-trust risks Lobbying Training and document retention Review current business models and contract template Consultation 33 /APAC 5320363
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Questions? 35 /APAC 5320363
Contact Xun Yang Of Counsel, Shanghai Commercial IP & Technology T +86 21 61719 313 M +44 E xun.yang@simmons-simmons.com Xun advises on commercial, regulatory and intellectual property work with a particular focus on life science, telecoms, media, electronics and financial service sectors. He has significant experience in advising on technology transactions, IT services, outsourcing, data privacy, and regulatory matters. He also actively assists Chinese companies in outbound transactions. This is the best law firm I have encountered they are as polished as I ve seen and make very good use of their time. Chambers Asia Pacific, TMT, 2016 36 /APAC 5320363
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