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#ChinaIP
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6th Advanced CHINA IP Counsel Forum
Antimonopoly Law’s Impact On Patent Licensing Practice
February 27 & 28, 2014
Tweeting about this conference?
Yufeng Ethan Ma
Director of IP, East Asia
Corning Incorporated
Nongfan Zhu
Partner
King & Wood Mallesons
#ChinaIP
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Administrative cases Qualcomm by NDRC
InterDigital by NDRC
Microsoft – Nokia deal's approval process by Mofcom
Judicial Cases Huawei v. InterDigital
Qihu 360 v. Tencent
Guangzhou Jinxing Textile Dyeing Co. v. Microsoft
IP-Related Antitrust Landscape
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Relevant market Relevant product market and relevant territorial market
Effect of substitutability on the scope of relevant market
Demand substitution and supply substitution
Dominant position in relevant market Control prices, quantities, and other trading conditions of products
Hinder or affect the entry of others into the market
Abuse of dominant market position Unfair high price
Refusal to trade
Unreasonable trading condition, different treatments on equivalent parties
Proof of Monopoly
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Huawei v. InterDigital Background
An US licensing company holds a number of standard essential patents for 3G wireless products
The largest telecom equipment manufacturer in China
US
EU
China
Huawei sued InterDigital for: 1. Anti-trust
Violation 2. FRAND
Royalties determination
InterDigital lost both cases! *
InterDigital sued Huawei at 1. ITC 2. Delaware for infringing its 3G standard essential patent InterDigital lost the ITC case!*
Huawei filed antitrust complaint against InterDigital Pending*
*Case status before settlement
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Huawei v. InterDigital Antitrust Case Timeline
Huawei filed the antitrust lawsuit before Shenzhen Intermediate Court
The Shenzhen Intermediate Court ruled in favor of Huawei and awarded it RMB 20 million ($3.3 million) in damages
The Guangdong High Court affirmed most of the rulings of the Shenzhen Intermediate Court in the appeal. (including the RMB 20 million in damages)
2011.12
2013. 2
2013. 10
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Huawei v. InterDigital How the Relevant Market Was Defined?
The commodity in patent licensing
One All
The territory
Scope of commodity Scope of territory
The relevant market
OR + ?
Country of Product made
Country of Product made
Country of Product sold
OR ?
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Huawei v. InterDigital Is InterDigital in A Dominant Position?
Two Considerations
InterDigital is a NPE makes profit by licensing patents, no grant-back needed
Each SEP is irreplaceable, and forms a market for licensing
Ability to block the entry of others into the relevant market
Ability to control the price of royalties and other licensing terms
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Huawei v. InterDigital Did InterDigital Cross the Line?
High royalties
Free grant back license
Bundling of SEPs and non- SEPs in license
Bundling of SEPs for different standards
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China, US and European Antitrust Trends in IP Licensing
China
US
• Barring discriminatory treatment in IP Licensing • Placing more and more rigorous scrutiny on
SEPs licensing
• Raising the threshold in the enforcement of SEPs • Licensing agreement may increasingly be
examined for antitrust reasons
• Firming its position against the abuse of SEPs • Pending SEP-related antitrust cases will draw a
clear line between lawful use and abuse
Europe
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A Closer Look at China
2003
•Provisions on issues concerning the trial of patent infringement (Draft for discussion, by the SPC) 关于审理专利侵权纠纷案件若干问题的规定（会议讨论稿）
2008
• Letter of the SPC on the issue of Chaoyang Xingnuo Company case 最高人民法院关于朝阳兴诺公司按照建设部颁发的行业标准《复合载体夯扩桩设计规程》设计、施工而实施标准中专利的行为是否构成侵犯专利权问题的函
2013 •Huawei v. InterDigital 华为反垄断诉讼案
2014
• Guidelines on Antimonopoly law enforcement in IP field (Draft) 《关于知识产权领域反垄断执法的指南》（草案）
•Qualcomm Investigation 高通反垄断调查
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A Closer Look at US
Google’s Settlement with FTC
• SEPs
• 2013.1
Microsoft v. Motorola • SEPs
• W.D. Wash. Jury trial
• 2013.9
FTC v. Actavis • Non-SEPs
• Supreme Court
• 2013.6
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A Closer Look at Europe
Orange Book
• 2009
• German Supreme Court
• Defense against an injunction based on SEP infringement was available
Moto v. Apple
• 2013
• European Commission
• Seeking an injunction based on SEP infringement may violate the EU antitrust rules
Huawei v. ZTE
• 2014?
• Court of Justice of the European Union(CJEU)
• Five questions concerning the remedies for SEP holder has been referred to CJEU
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Factors in A Patent License That Affect the Risk of AML Violation
Lower Risk Higher Risk
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Some Suggestions for Patent Licensors
Consider the context under which the IP Agreement is being made
Compare the current
licensing offer with the existing
agreements
Check whether the terms may
project anti-competitive
effects
Other measures to
be considered
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Three Questions to Ask
With dominant market position
Without dominant market position
What?
Aim only at collecting royalties
Aim at controlling the market
Why?
Via equal & amicable negotiation
Via threat of litigation & injunction
How?
vs.
vs.
Back
vs.
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Can These Factors Justify The Royalty Difference in The Licensing Offer?
Back
Grant-back license
Time to enter into the
agreement
Sales volume Other
considerations
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Licensing Terms that May Matter from An Antitrust Perspective
Scope of license
Promise not to challenge
Other requirements
Purchase commitment
License grant-back
Back
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Other Measures to Be Considered for Reducing the Risk of Violating Antitrust Laws
Feasibilit
y
Efficienc
y
Obtain legal advice from a law firm or expert opinion of an economist
• Can be useful in tailoring the deal to lower the possibility of violating antitrust laws
• May be served as a defense evidence in antitrust litigation
• But not necessarily protect the defendant from antitrust liabilities
Proactively submit the License Agreement to relevant government authorities for review/approval
• Seems reliable but feasibility is in doubt
• Can have great impact on efficiency
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Addition of relevant technology market and relevant innovation market (Rule 3)
Holding of IP - a factor but not a direct presumption for finding dominant market position (Rule 7)
Discriminative refusal of IP license, or IP refused is a necessary facility to compete and yet cannot practically be avoided to impact the relevant market (Rule 8)
Patent pool – restricting pool participants to license independently or research (Rule 11)
SSO – failure to disclose information at the standard formation stage (Rule 12)
Draft SAIC Rules Against IP Abuse
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Nongfan Zhu
TEL:010-5878 5080
Yufeng Ethan Ma
TEL:021-2215 2815
Questions?
Contact Information
