The Application of Essential Facilities Doctrine in Antitrust Regulation of IP Rights

Abstract

The State Administration for Market Regulation has referred to the concept of "essential facilities" in two regulations, and some courts have utilized the essential facilities doctrine in their judgments to recognize a defendant's refusal to deal as an illegal act of monopolization. As a doctrine originally applicable only to tangible properties in the United States, the essential facilities doctrine has gradually evolved through case law to be applied in the context of intellectual property (IP) rights. Nevertheless, there remains significant controversy in China and other jurisdictions as to whether the essential facilities doctrine can be extended to IP rights. Given the fundamental differences between intangible and tangible properties, as well as the core mechanisms of IP laws, greater caution and limits must be exercised when applying the essential facilities doctrine to IP. Specifically, (1) compulsory licensing should only be implemented when the IP in question is deemed an essential facility; (2) Article 7 of the Provisions on the Prohibition of the Abuse of Intellectual Property to Eliminate or Restrict Competition should be interpreted as "harm the competition in the secondary market"; and (3) in cases involving compulsory licensing, the court should examine whether such licensing would have an unreasonable adverse impact on the rights holder.