China’s NDRC adopts effect-based approach to SEP regulations, official says

31 January 2017 9:55am

23 April 2015. By MLex Staff.

China's antitrust watchdog, the National Development and Reform Commission, adopts an effect-based approach and takes into account four key principles to evaluate whether the licensing of standard-essential patents, or SEPs, violates the country's antitrust law, a key case handler at the agency said.

"We adopt an effect-based approach to assess whether it causes competition damage," Liu Jian, a deputy director at the NDRC's Price Supervision and AntiMonopoly Bureau, told a conference in Beijing.

He said the NDRC focuses on whether a SEP holder has a dominant market position in the relevant market, and whether there is evidence proving its abusive behavior.

The regulator also looks into whether such abusive behavior has no justified reason, and causes damage to market competition.

He said the agency pays attention to abusive market behavior, such as excessive pricing, refusing to trade, restricting trading, discriminatory treatment, bundling, and imposing unreasonable trading conditions, as set out in Article 17 of the Antimonpoly Law.

More notably, the agency looks at unreasonable licensing agreements, and focuses on non-practicing entities, or NPEs, that seek injunctions of SEPs against willing licensees, he said.

"The NDRC adheres to the principle that enforcement should come ahead of legislation, so as to improve rules during the exploration," he said.

He also said there are boundaries for the regulator's intervention in the intellectual property area, and that regulators should especially shy away from deciding the exact detail of royalties, which should be decided through market negotiation.

"We should guard against over-interference," he added.

He said that the regulator should be cautious in enforcement and avoid being used by some companies to prevail over their competitors or to gain advantage in negotiations.

The regulator's enforcement is not to solve a specific case or dispute, but instead to restore the competition order for the entire market, he said. The regulator should also focus on competition concerns, rather than other considerations, he said.

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