An economic perspective of standards and FRAND enforcement in China

Abstract

China has confronted issues surrounding fair, reasonable and non-discriminatory terms (FRAND) for standard essential patents (SEPs) and has become an important arena for FRAND-related antitrust enforcement and litigation. This article summarizes the key enforcement activities in China to date by the Chinese courts and three antitrust enforcement agencies with regard to FRAND issues. These activities indicate that China’s approach to analysing and enforcing FRAND terms has been under the framework of the abuse of dominance. Chinese authorities’ decisions to date appear to indicate the following logic when deciding the FRAND issues: SEP holders generally possess market dominance in licensing SEPs, and that disputes concerning SEPs licensing terms may be scrutinized for the risks of abuse of market dominance. This abuse may take the form of charging excessive rates, imposing unreasonable licensing terms, or both. They also reflect that Chinese authorities appear to place an emphasis on preserving FRAND commitments, regardless of whether they are requested by a standard setting organization or unilaterally made by an individual company.