Wednesday, July 31, 2013

Paper on injunctive relief for standard-essential patents, with an emphasis on Chinese law

Wu Chengjian and Zhang Xiao have published an article titled On Injunctive Relief for Standard-Essential Patents in China Patents & Trademarks No. 2, 2013, pp. 27-33.  (The magazine's website is here.)  The authors first provide an "overview of judicial practice relevant to injunctive relief in China and abroad," with particular emphasis on the U.S., Germany, and China.  The authors note that Chinese courts have some discretion to deny injunctive relief to the prevailing patentee, as in the Wuhan Jingyuan case of 2009 (discussed in my book at pp. 349-50) which, however, did not involve a standard-essential patent.  The authors also note that in recent years Chinese authorities have tried to work out to some rules relating to injunctive relief for standard-essential patents, but that to date no such rules have been adopted.  The authors then present their views on three different possible models for approaching the issue:  (1) "no injunction is granted in all events"; (2) "license negotiation under court supervision"; and (3) "license negotiation before injunction takes effect."  They argue in favor of the third option, under which a court would grant an injunction but stay its effect while the parties negotiate the terms of a license.  If no license is concluded, the court would then determine whether the defendant's offer was within the FRAND range; if so, the injunction would be lifted.  I don't agree with the authors' conclusion, but the article makes for stimulating reading.

Relatedly, in a decision earlier this year in an antitrust dispute brought by Huawei against InterDigital, a court in Shenzhen held that InterDigital violated China's antitrust law by requesting excessive royalties and bundling essential and nonessential patents together.  In addition, the court calculated that a FRAND royalty "should not exceed 0.019% of the actual sales price of each Huawei product."  Lisha Zhou, Joy Shaw & Eliot Gao, Chinese regional court makes landmark FRAND judgement in Huawei/InterDigital.  (Hat tip to Danny Sokol for bringing this article, from "Policy and Regulatory Review," to my attention.)  The court's ruling is not public, so at this point we don't know how the court calculated the royalty.  There is also coverage here and here.

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