Provisions on Prohibiting the Abuse of Intellectual Property Rights to Exclude or Restrict Competition

Provisions on Prohibiting the Abuse of Intellectual Property Rights to Exclude or Restrict Competition

Order of the State Administration for Market Regulation
(No. 79)

The Provisions on Prohibiting the Abuse of Intellectual Property Rights to Exclude or Restrict Competition, as adopted at the 11th executive meeting of the State Administration for Market Regulation on June 15, 2023, are hereby issued, and shall come into force on August 1, 2023.

Director: Luo Wen

June 25, 2023

Provisions on Prohibiting the Abuse of Intellectual Property Rights to Exclude or Restrict Competition

Article 1 These Provisions are developed in accordance with the Anti-monopoly Law of the People's Republic of China (hereinafter referred to as the “Anti-monopoly Law”) in order to prevent and curb the abuse of intellectual property rights to exclude or restrict competition.

Article 2 Anti-monopoly and the protection of intellectual property rights share a common goal, namely promoting competition and innovation, improving the efficiency of economic operation, and protecting the interests of consumers and public interest.

Undertakings shall exercise intellectual property rights in accordance with the provisions of laws and administrative regulations related to intellectual property rights, but they shall not abuse intellectual property rights to exclude or restrict competition.

Article 3 For the purposes of these Provisions, “abuse of intellectual property rights to exclude or restrict competition” means an undertaking's exercise of intellectual property rights in violation of the Anti-monopoly Law to reach a monopoly agreement, abuse its dominant market position, or commit a concentration between undertakings or any other monopolistic conduct that has or may have the effect of excluding or restricting competition.

Article 4 The State Administration for Market Regulation (hereinafter referred to as the “SAMR”) shall, in accordance with the provision of paragraph 1 of Article 13 of the Anti-monopoly Law, be responsible for unified anti-monopoly law enforcement against the abuse of intellectual property rights to exclude or restrict competition.

The SAMR shall, in accordance with the provision of paragraph 2 of Article 13 of the Anti-monopoly Law, authorize the market regulatory departments of all provinces, autonomous regions, and municipalities directly under the Central Government (hereinafter referred to as the “provincial market regulatory departments”) to be responsible for anti-monopoly law enforcement against the abuse of intellectual property rights to exclude or restrict competition, such as monopoly agreements and abuse of dominant market positions, within their respective administrative regions.

For the purposes of these Provisions, anti-monopoly law enforcement authorities include the SAMR and provincial market regulatory departments.

Article 5 For the purposes of these Provisions, “relevant market” includes the relevant commodity market and the relevant geographic market, as defined in accordance with the Anti-monopoly Law and the Guide of the Anti-Monopoly Committee of the State Council to the Definition of the Relevant Market and in consideration of the impact of intellectual property rights, innovation, and other factors. In law enforcement against monopoly involving intellectual property licensing, among others, the relevant commodity market may be the technology market or the market of products containing particular intellectual property rights. The relevant technology market is the market formed through the competition between the technologies involved in the exercise of intellectual property rights and alternative technologies of the same kind.

Article 6 Undertakings shall not reach a monopoly agreement between them as prohibited by Article 17 or paragraph 1 of Article 18 of the Anti-monopoly Law by means of exercising intellectual property rights.

An undertaking shall not, by means of exercising intellectual property rights, arrange for other undertakings to reach a monopoly agreement or provide substantive assistance for other undertakings to reach a monopoly agreement.

If an undertaking is able to prove that the reached agreement falls under any of the circumstances specified in Article 20 of the Anti-monopoly Law, the provisions of paragraphs 1 and 2 shall not apply.

Article 7 Where an undertaking reaches an agreement as specified in subparagraph (1) or (2), paragraph 1 of Article 18 of the Anti-monopoly Law with the other party to the transaction by exercising intellectual property rights, the agreement shall not be prohibited if the undertaking is able to prove that the agreement has no effect of excluding or restricting competition.

If an undertaking reaches an agreement with the other party to the transaction by exercising intellectual property rights, and the undertaking is able to prove that the share of the undertaking participating in the agreement in the relevant market is lower than the standard prescribed by the SAMR and satisfies other conditions prescribed by the SAMR, the agreement shall not be prohibited. The specific standards may be governed, mutatis mutandis, by the relevant provisions of the Guide of the Anti-Monopoly Committee of the State Council to Anti-monopoly in the Field of Intellectual Property Rights.

Article 8 No undertaking with a dominant market position may abuse its dominant market position to exclude or restrict competition in the course of exercising intellectual property rights.

The dominant market position shall be determined and presumed in accordance with the provisions of the Anti-monopoly Law and the Provisions on Prohibiting the Abuse of Dominant Market Position. An undertaking's ownership of intellectual property rights may be one of the factors for determining its dominant market position, but it shall not be presumed that the undertaking has a dominant market position in the relevant market merely because it owns intellectual property rights.

In determining whether an undertaking that owns intellectual property rights has a dominant position in the relevant market, considerations may also be given to the factors such as the possibility and cost of the other party to the transaction in the relevant market to turn to alternative technologies or products, the degree of dependence of the downstream market on the commodities provided by the use of intellectual property rights, and the balancing power of the other party to the transaction to the undertaking.

Article 9 An undertaking with a dominant market position shall not, in the course of exercising its intellectual property rights, license intellectual property rights or sell products containing intellectual property rights at an unfairly high price, so as to exclude or restrict competition.

The following factors may be considered in determining the act prescribed in the preceding paragraph:

(1) The research and development cost and recovery period of the intellectual property right.

(2) The methods for calculating the royalty for and conditions for licensing the intellectual property right.

(3) Comparable previous royalties or royalty rates for the intellectual property right.

(4) The commitment made by the undertaking to the licensing of the intellectual property right.

(5) Other relevant factors that need to be considered.

Article 10 An undertaking with a dominant market position shall not, without any justification, refuse to license other undertakings to use its intellectual property rights under reasonable conditions to exclude or restrict competition in the course of exercising intellectual ......