THE LATEST DEVELOPMENT IN TRIAL OF IP CASES BY PRC COURTS

—— IP-related anti-monopoly judicial review

DING WENLIAN

Shanghai High People’s Court

A Few Important Changes in Trial of IP Cases

Patent Cases: more consideration is now given

to patent claims

Trade Mark Cases: taking a more and more

strict approach in prohibiting trademark confusion

Copyright Cases: be more concerned about

the new issues arising out of new technologies and

new business models

Another Equaling Important Change

IP-related anti-monopoly dispute is an

emerging and growing issue in PRC

courts.

Three Cases

Dexian v. Sony

Jingdiao v. Naikai

Huawei v. InterDigital

Dexian v. Sony

Does the

defendant’

s act

constitute

illegal tie-

in sale？

the court adopted the test in the anti-monopoly

law about the legality check on tie-in sale:

even if the defendants successfully realized tie-in sale

between the digital devices and batteries through their

patent and technology secret, such tie-in sale cannot

be further reviewed for its legality unless the

defendant has dominance in the relevant market

Dexian v. Sony

Jingdiao v. Naikai

Does the

defendant’

s act

constitute

infringeme

nt of

copyright

？

a carving software named “JD-paint”

a digital control system

A carving machine

Jingdiao v. Naikai

work flow

running the JD-Paint program to make a design• creating a Eng

format file

reading the Eng format file• turning it into

machine instructions

receiving the machine instructions• executing the

machine instructions (carving)

If such technical measure is protected by court, then the plaintiff’s benefits associated with its software copyright will be inappropriately expanded to cover its machines, and hence such protection would exceed the boundaries of software copyright. Therefore, the technical measure taken by the plaintiff is different from the technical measures as protected under the copyright law, and the defendant’s decoding accordingly does not constitute copyright infringement.

Jingdiao v. Naikai

from copyright law perspective: whether the defendant’s developing its own software for decoding the Eng format files is within the contral of the plaintiff’s software copyright;

from competition law perspective: whether the plaintiff’s technical measure, if protected by the court, will restrict free competition in the carving machine market.

Jingdiao v. Naikai

Huawei v. InterDigital

The plaintiff accused that:

1) high pricing and discriminatory pricing;

2) unreasonable trading condition;

3) tie-in sale;

4) denial of transaction.

The court held that each of the standard

essential patents as owned by the defendant is

unique and irreplaceable, and hence the license

market for each standard essential patent

constitutes an independent relevant market. The

relevant product market in this case is actually a

cluster of all relevant markets of patent licenses.

The Definition of Relevant Market

Dominant Position

The defendant has full market share in each of

these standard essential patent license markets,

and is capable of impeding or influencing

access to the relevant market by other business

operators. The court therefore recognized that

the defendant has dominant position in the

relevant market.

Determining the Defendant’s Act

High pricing: the royalty fee for the plaintiff charged by the defendant is much higher than those for Samsung and Apple, and in addition to that, the defendant also required the plaintiff to license all of its patents to the defendant for free

Tie-in sale: bundling licenses of essential patents and non-essential ones

license of patents package including 3G standard

essential patents, 4G ones, and its globally-owned

patents, such practice is widely accepted in the market

and hence does not constitute tie-in sale under market

dominance abusing.

the lawsuits brought by the defendant in the US do not

constitute denial of transaction.

Determining the Defendant’s Act

Judgement

the court ruled that the defendant

immediately cease its inappropriately high and

discriminative pricing targeting the plaintiff, as

well as its tie-in sale of bundling licenses of

essential patents and non-essential ones, and

compensate the plaintiff 20 million Yuan for its

losses, while the remaining claims be rejected.

Attempts in This Trial

on the issue of relevant market definition, the court defined the license market for each standard essential patent as one independent relevant market based on the irreplaceability of such patent;

on whether the royalty fee for the plaintiff is inappropriately high and discriminative, the court made a reference to the obligation of equality, reasonableness and non-discrimination as required by the European Telecommunications Standards Institute (ETSI) to which both parties are members, and also made a comparison between the terms and conditions on the defendant’s license of its patents to the plaintiff and those for Samsung and Apple, and considered the inequality in patent cross-licensing between the two parties.

Inspirations of the Three Cases

two perspectives

to clarify the boundaries between justifiable exercise of IP rights and restriction on competition (to protect free competition in technologies)

to build the analytical framework

THANK YOU

FOR YOUR PATIENCE!

DING WENLIAN

Shanghai High People’s Court