Abuse Of IP Rights Under China's Antitrust Rules: Recent Cases Have A Potentially Serious Impact

Corporations doing business in China, based on their intellectual property (IP) rights, need to be aware of the potentially serious impact of China's Anti-Monopoly Law and other antitrust rules.  China's Anti-Monopoly Law prohibits the holder of IP rights from abusing those rights when it has a dominant market position.  Such dominance can be achieved under Chinese law with a market share as low as 10 percent.  Two recent cases demonstrate the greater reliance of Chinese companies on the antitrust rules, particularly when bargaining for lower royalties and license fees.

Interdigital v. Huawei

The Shenzhen Intermediate Court recently decided that Interdigital abused its patent rights by requiring Huawei to pay "excessive" royalties for essential patents for mobile telephone technology.  The license terms proposed by Interdigital to Huawei reportedly complied with the European Telecommunications Standards Institute's policy as Fair, Reasonable and Non-Discriminatory