An International Guide to
Patent Case Management for Judges

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4.5.4 Civil cases involving standard-essential patents

Civil cases involving standard-essential patents mainly involve civil disputes over patent infringement, patent contracts, royalties and abuse of market dominance involving standard-essential patents. Patent-related cases

In July 2008, in their Letter on Chaoyang Xingnuo Company’s Act of Exploiting a Patent,117 the Supreme People’s Court expressed the following opinion on the request for instruction raised by the High People’s Court of Liaoning:

Given the reality that China’s standard-setting organization has not established systems with respect to the public disclosure of information and exploitation of patents incorporated in relevant standards, where a patentee has participated in the formulation of a standard or has consented to the incorporation of a patent in a national, industrial, or local standard, then the patentee shall be deemed as having licensed others to exploit the patent while implementing the standard, and the relevant acts of exploiting the patent by others do not constitute acts of patent infringement as stipulated in Article 11 of the Patent Law. The patentee may require the exploiter to pay an amount of royalties which, however, shall be significantly lower than ordinary royalties; where the patentee has undertaken to waive the patent royalties, such an undertaking shall apply.

Article 24 of the Interpretation (II) of Patent Infringement Dispute Cases specifically provides for issues concerning standard-essential patents, which primarily involve important issues such as the disclosure of patent information related to technical standards; defenses against infringement; applicable conditions for the cessation of infringement; negotiation and adjudication of exploitation licensing conditions; and fair, reasonable and nondiscriminatory licensing obligations, among other issues. Paragraphs 1–3 of this article stipulate the following:

Where a recommended national, industrial, or local standard has explicitly indicated the information of an essential patent, an alleged infringer’s non-infringement defense on the ground that such a standard may be implemented without license shall generally be rejected.

Where a recommended national, industrial, or local standard has explicitly indicated the information of an essential patent, when the patentee and an alleged infringer negotiate licensing terms for exploitation of the patent, if the patentee willfully violates the fair, reasonable, and nondiscriminatory licensing obligation undertaken thereby during the formulation of the standard, which results in failure to reach a patent exploitation licensing contract, and if the alleged infringer has no obvious fault in the negotiation, the patentee’s request for cessation of implementation of the standard shall generally be rejected.

The exploitation licensing terms referred to in the preceding paragraph 2 shall be negotiated between the patentee and the alleged infringer. If the parties fail to reach an agreement after sufficient negotiation, they can request a people’s court to determine the licensing terms. In determining the licensing terms, the people’s court shall, in accordance with the principle of fairness, reasonableness and nondiscrimination, comprehensively consider such factors as the innovation level of the patent, its contribution in the standard, the technical field which the standard falls under, the nature and the implementation scope of the standard, and relevant licensing terms.

Before this judicial interpretation was issued, the Standardization Administration of China and the CNIPA had issued the Regulatory Measures on National Standards involving Patents (Interim) in December 2013, which improved the procedure for the disclosure of patent information related to national standards and specifically stipulated that patents involved in national standards are essential patents. To maintain consistency with these interim measures, the Interpretation (II) of Patent Infringement Dispute Cases only provided for recommended standards (i.e., nonmandatory standards) and explicitly indicated their related patents but did not provide for issues such as standards without disclosure of patent information, mandatory standards, international standards and so on, which were also not mentioned in the foregoing interim measures.

With respect to technical standards related to pharmaceutical products, in a retrial of a dispute over invention patent infringement, Qilu Pharmaceutical Co. v. Beijing Sihuan Pharmaceutical Co.,118 the Supreme People’s Court held that the prevailing laws and administrative regulations involving pharmaceutical product administration and registration do not require right holders of pharmaceutical product patents to make “fair, reasonable and nondiscriminatory” undertakings in the licensing of such pharmaceutical product patents when cooperating in the formulation of national pharmaceutical product standards. There was no evidence in this case to prove that Beijing Sihuan Pharmaceutical had made “fair, reasonable and nondiscriminatory” undertakings in the licensing of the patent during the formulation of the national pharmaceutical product standard related to the involved patent. Therefore, the principle of “fairness, reasonableness and nondiscrimination” did not apply. Monopoly-related cases

The Supreme People’s Court issued the Provisions on Cases of Monopoly Disputes in 2012, amending it in 2020.119 This judicial interpretation includes 16 articles that specify issues such as the types of cases, the filing of lawsuits, jurisdiction and trial, the burden of proof, evidence, civil liabilities and the statute of limitations with respect to monopoly-related cases. It further clarified relevant provisions of the Anti-monopoly Law.120 Article 3 of the provisions stipulates the following:

Monopoly-related civil dispute cases of first instance shall come under the jurisdiction of intellectual property courts or intermediate people’s courts of cities where the governments of provinces, autonomous regions, or municipalities are located or of cities under separate state planning, or intermediate people’s courts designated by the Supreme People’s Court.

In addition to the above law and judicial interpretation, the Anti-monopoly Commission, under the State Council, issued the Guidelines on Anti-monopoly in the Field of Intellectual Property Rights on January 4, 2019, and the Guidelines on the Definition of Relevant Market on July 6, 2009.121

In an appeal of a dispute over an objection to jurisdiction over market dominance abuse, Ericsson v. TCL Group Corp.,122 the Supreme People’s Court held that Article 2 of the Anti-monopoly Law specifies that the law is applicable to monopolistic conduct outside the territory of China. At the same time, it held that Article 2 also indicates that, for jurisdiction over monopoly dispute cases, the place where the alleged monopolistic conduct led to the elimination or restriction of competition can be the connecting point of jurisdiction.