Jacob Schindler

A final version of China’s new antitrust IP rules will be published inside six months, government authorities have stated. Last week, the country's IP Strategy Implementation Working Group held a meeting and according to local media reports made clear that the guidelines on abuse of IP rights would be finalised and made public before the end of 2017.

The new document is expected to be the most definitive Chinese policy on IP and antitrust to date, following several years of drafts and consultations. The arrival of the rules will be a big moment for both IP licensors and licensees in the country, many of whom have been working behind the scenes for years to influence the direction the final guidelines take.

In China, at least three powerful regulators exercise sometimes overlapping oversight duties in the nexus between IP and antitrust, making it a challenge for patent owners to get a clear idea of the state of play. What’s significant about the policy that will be rolled out this year is that it will be the first time that the country’s regulatory bodies will present a unified national policy. The level of certainty this brings is something that will be welcomed by patent owners.

The State Administration for Industry & Commerce (SAIC) published guidelines on IP abuse which took effect in 2015. In the same year, the State Council (China’s cabinet equivalent) authorised four key agencies – SAIC, the National Development & Reform Commission (NDRC), the Ministry of Commerce (MOFCOM) and SIPO – to draft joint guidelines on IP abuse. While both SAIC and NDRC published proposed unified strategies, input from MOFCOM (which oversees mergers) and SIPO was never made public.

Back in Issue 74 of IAM, we looked at the SAIC rules that took effect in 2015. One of the major red flags was an apparent embrace of an ‘essential facilities doctrine’, which called into question whether China’s regulators would recognise the core exclusionary rights of patent owners. Aside from that point, the rules largely brought China into line with international principles, lawyers said. The key takeaway for licensors and licensees was that they should have standard procedures in place for licensing in order to avoid potentially becoming the target of an investigation.

Looking at a recent draft of the unified IP abuse guidelines, the China office of Allen & Overy noted that the influence of the NDRC is clear in the combined draft policy. But they also reported that the SAIC’s position on essential facilities had made it into the draft. So while the draft does take significant positions that are favourable to IP owners, there remain a number of areas in which the guidelines “continue to support a rather heavy-handed approach to the application of antitrust rules to the use of IPRs”.

Public consultation has ended, and key Chinese and multinational companies will have had their say. Numerous past drafts suggest that whatever guidelines appear later this year are likely to be a something of a mixed bag. Once they’re published there will be a lot more clarity around policy, and the big questions will turn to the who and how of enforcement.