Wednesday, May 11, 2016

More on FRAND in China

1.  Danny Sokol and Wentong Zhong have posted a paper on ssrn titled FRAND (And Industrial Policy) in China, which is a chapter in the forthcoming Cambridge Handbook of Technical Standardization Law, Vol. 1: Antitrust and Patents (Jorge L. Contreras, ed., Cambridge Univ. Press).  Here is a link, and here is the abstract:
This Chapter discusses antitrust-related FRAND issues in China. In Part I, we provide an overview of China’s antitrust regime and its interaction with intellectual property rights. In doing so, we offer an explanation of the nature of the Chinese antitrust regime that builds upon both the industrial organization and the political economy literatures. We also discuss the NDRC investigation into Qualcomm. Part II of this Chapter discusses standard setting in China, and how FRAND-related issues are handled under Chinese standard-setting laws and regulations. In Part III, we explore recent developments in Chinese courts that impact FRAND. In particular, we discuss the Huawei v. InterDigital case and its implications for global FRAND licensing. In Part IV, we offer thoughts on the lack of transparency in China’s antitrust regime as well as the use of industry policy in the FRAND setting and how these issues may negatively impact consumer welfare.
Of particular interest is the discussion on pp. 19-25 of "FRAND in Chinese courts," which includes not only a discussion of Huawei v. InterDigital but also mentions a 2008 Supreme People's Court judicial reply to the effect that ". . . if a patent holder has participated in the making of a national, sector, or local standard or has consented to including its patents in a national, sector, or local standard, the patent holder will be deemed to have consented to allow others to use the patents for purposes of implementing the standard, and those uses will not constitute patent infringement. The patent holder may ask the users to pay a royalty fee, but the amount of the fee should be significantly lower than the normal amount."  The authors discuss the application of this principle in a 2011 decision by the Hebei High People's Court, but also state that because "the SAC’s 2014 regulation has eliminated the 'significantly lower than normal' phrase, it is not entirely clear whether the SPC would still take the same approach if it were asked to address this issue anew today."

2.  Yijun Ge and Benjamin Bai recently published an interesting post on the Kluwer Patent Blog titled SEP-Based Injunctions:  Down But Not Out.  In addition to discussing Huawei v. InterDigital, the authors mention a 2014 Supreme People's Court decision, Zhang Jingting v. Hengshui Ziyahe Construction Co., Ltd., in which the court "alluded to the availability of SEP-based injunctive relief."  According to the authors:
In the Zhang case, the Supreme Court distinguished its 2008 reply, noting that the plaintiff as the patentee fulfilled its patent disclosure obligation. Specifically, the standard at issue recites the information regarding the patent-in-suit and the patentee in its preface. According to the Court, an implementer of the standard thus cannot possibly infer that the plaintiff’s essential patent is intended to be used on a royalty-free basis. The Court held that:
“Implementing the standard requires obtaining a license from the patentee, and paying license fees according to the fair, reasonable and non-discriminatory principle. As a general rule, remedies against patent infringement should not be limited where an implementer who has used [the technology] without the patentee’s authorization refuses to pay the license fees. ” (Emphasis added)
The Zhang case seems to indicate that an SEP holder can seek injunctive relief against an infringer who refuses to pay FRAND license fees.

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