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By Dragon Wang and Austin Chang at Beijing East IP Ltd.
On April 26, the Guangdong Higher People’s Court issued Guidelines for Trial of Dispute Cases Involving Standard Essential Patents (for Trial Implementation) (the “Guidelines”). The Guidelines includes 32 articles and focuses on the following four aspects: 1. General issues regarding standard essential patent (SEP) dispute cases; 2. Issues on civil liability for ceasing implementation of an SEP; 3. Issues for determining SEP license fees; and 4. Issues for anti-trust dispute trial involving SEP.
Summary of the Guidelines
1. General issues regarding SEP dispute cases
This section listed the good faith principle, FRAND commitments, patent ownership, customary business practices, standards developing organizations (SDOs) commitments, and jurisdiction.
2. Issues on civil liability for ceasing implementation of SEP
Three steps to determine SEP infringement:
The court provides factors to determine whether to support a request for injunction:
The court provides factors to determine whether an SEP owner fails to satisfy the FRAND commitments:
Factors to determine explicit faults of an SEP implementer:
3. Issues for determining SEP license fees
The court points out that once an SEP owner has fully discussed its license terms with the implementer but still fails to reach an agreeable license fee, that SEP owner may bring a lawsuit. The court states that where an SEP owner or an implementer requests a court to determine SEP license fees outside of the court’s jurisdiction, such court may do so on its discretion given that no other rejection is raised by the other party.
The court lists the following methods for determining SEP license fee:
In addition, the court states that if one party has evidence to proof that the other party holds critical information on SEP license fees, that party may ask court to order the other party to provide such information. If the other party fails to provide such information, court may render a decision based on available evidence and alleged license fees.
4. Issues for anti-trust dispute trial involving an SEP
The court lays out some important issues to be considered when trying an anti-trust case that involves an SEP.
These guidelines, though mimic part of the guidelines issued by the Beijing High Court last year, provide more detail look into Chinese court’s perspective on SEP disputes, such as, first, to make sure that Guangdong courts follow the guidelines in render decisions on SEP disputes, because Guangdong is home to dozens of major Chinese handset and high-tech manufacturers, where SEP disputes are most likely to be brought. Second, these guidelines confirm Chinese courts’ ambition on taking a lead in adjudicating worldwide SEP disputes in China. Third, these guidelines also show Chinese courts’ willingness to take the challenge in determining royalty rates in a global scale.