Anti-trust Practice in China concerning SEP and FRAND China Patent Agent (H.K.) Ltd

Anti-trust Practice in China concerning

SEP and FRAND

China Patent Agent (H.K.) Ltd.

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Why do we care?

23/4/19 2© CHINA PATENT AGENT (H.K.) LTD.

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• USD 3,000,000 (2013) -IDC compensates Huawei as result of a global

licensing negotiation

• USD 975,000,000 (2015) -Qualcomm is fined for not licensing “right” in China.


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Who is in charge?


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Anti-trust authorities in China

- National Development and Reform Commission (NDRC，发改委 )

- State Administration for Industry and Commerce of the People‘s Republic of China (SAIC，工商局 )

- Ministry of Commerce (MOFCOM，商务部 )


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Anti-Monopoly Law (2008)• Chapter III Abuse of market power

• Unfair pricing

• Dumping

• Refusing to deal

• Conditional deals

• Tie in

• Discriminations


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Anti-Monopoly Law (2008)

• Chapter IV Merge of competitors

• Report for approval (by MOFCOM)


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What is hot?


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• Huawei v. IDC (2011-2013)

• NDRC’s Investigation on IDC and Qualcomm (2013-2015)

• Regulations on the Administration of National Standards involving Patents, 2013 (provisional)

• New SAIC Draft of IP Abuse Rules (public comment version)


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Huawei v. IDC


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Huawei v. IDC• Jul., 2011, IDC filed complaints at ITC and Delaware

• Dec., 2011, Huawei filed lawsuit in China

• Feb., 2013, ruled by Shenzhen Intermediate Court

• May, 2013, Huawei filed complaint at NDRC

• Jun., 2013, ITC preliminary decision

• Oct. 2013, upheld by Guangdong High Court

• Dec. 19, 2013, ITC final decision


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Huawei v. IDC

• Allegations:

• Discriminatory over-pricing

• Tying non-essential patents to SEPs

• Seeking injunction in U.S. during the negotiation

• Key issues:

• Chinese courts’ jurisdiction

• Market power


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Huawei v. IDC

• Chinese decision

• USD 3 million compensation to Huawei

• 0.019% royalty rate* (*Apple’s rate:0.0187%)

• U.S. decision

• All patents invalid or not infringed


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Huawei v. IDC

• 2013-2014, NDRC’s investigation on IDC

• May 2014, investigation suspended based on IDC’s commitments:

• NO discriminatory overpricing

• NO tying

• NO free grant back

• NO lawsuit for forcing


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NDRC’s decision on Qualcomm


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• In November 2013, NDRC’s dawn raid at Qualcomm’s Beijing and Shanghai offices

• In February 2015, NDRC ordered a fine of RMB 6.088 billion (USD 975 million).


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• royalty based on cellphones not chips• inclusion of expired SEPs (no patent list)• mandatory, free grant-back • tying non-essential patents/chips• refusing to license other chip makers

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NDRC’s on Qualcomm


Unilateral commitment

• 65% sale price as royalty basis• submission of patent list• exclusion of expired patents• no free grant back• no tying• no unfair restrictions

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Regulations on the Administration of National Standards involving Patents, 2013 (provisional)



• Article 5. Reveal patents during standardization

• Article 9. Announcement on License Term

• choosing 1 from 3 terms

• Article 10. NOT included in standards, if refusing to license

• Article 18. License announcements included in international standards are applicable to national standards

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New SAIC Draft of IP Abuse Rules



•Article 9. No tying in

•Article 10. No unfair restrictions

• exclusive grant back

• licensee estoppels

• forbidding competitive solutions after the license terminates

• charge on expired or invalid patents

• forbidding deals with 3rd party

•Article 13. Anti-competition involving standards

• submarine standard-related patents

• violation of FRAND

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Anti-trust in mergers



Google and Motorola (2012)

• Google’s commitments ：• FRAND

• Android platform

• Motorola Mobile patents


Microsoft and Nokia (2013-2014)

• Microsoft’s commitments • SEP: FRAND/no injunctions/no grant back

• non-essential patents: rate and other terms unchanged

• Nokia’s commitments ：• FRAND

• no injunctions (unless lack of good faith)

Thanks for your attention.

Yanfeng XIONGLegal Affair Department

China Patent Agent (H.K.) LtdTel.: (86-10) 82202269

E-mail: [email protected]


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Anti-trust Practice in China concerning SEP and FRAND China Patent Agent (H.K.) Ltd