Enforcement of Standard Essential Patents (SEPs) in China

Author:YU Xiaoning | UpdateTime:2016-10-25 | Hits:

Since Huawei Vs. IDC in 2013, Standard Essential Patents (SEPs) have become a hot topic in the IP field in China. Especially, the SEP infringement cases filed in this year, such as Huawei Vs. Samsung and Qualcomm Vs. Meizu, have attracted more attentions.

Being adopted in the standards, SEPs gain greater monopoly compared with ordinary patents. Accordingly, more restrictions are applied to the enforcement of SPEs to protect those who implement the standards with good faith.

Firstly, licensing terms for SEPs should follow the FRAND principle. However, current laws do not provide or explain the definition of the FRAND principle, so whether the licensing terms follow the FRAND principle is often a focus of the negotiation between the licensor and the licensee. In Huawei Vs. IDC, the Guangdong High Court provided its opinion on the FRAND principle. The Judicial Interpretation coming into effect in April, 2016 provides that when the two parties cannot reach an agreement on the licensing terms, they may request the court to determine the licensing terms, and the court should make the determination based on the FRAND principle with reference to several factors, but the Judicial Interpretation does not interpret the FRAND principle.  

Secondly, if the SEP patentee conducts improper licensing activities, it may be published by the anti-trust law. A three-step test, i.e. determining the relevant market, determining whether the patentee has the dominant position in the relevant market, and determining whether the patentee has abused the dominant position, may be adopted to determine whether the activities conducted by the patentee are monopolistic. In Huawei Vs. IDC and NDRC Vs. Qualcomm, both the court and NDRC held that the licensing market of each SEP constitutes a relevant goods market, the SEP patentee has a 100% share in this market, and IDC and Qualcomm have abused their dominant positions and conducted monopolistic activities.

In SEP infringement lawsuits, it is in dispute on how to determine the royalty of the SEPs and on the condition under which the injunction should be issued. It is expected that the courts in Huawei Vs. Samsung and Qualcomm Vs. Meizu may go further in this aspect.