1. 1 The Relationship Between the Antitrust Law and the Intellectual Property Protection Wang Xianlin, Law School of Shanghai Jiao Tong University wangxianlin@sjtu.edu.cn 2010-3-11 Changsha

2. 2 Main Content  I 、 General Discussion on the Relationship between the Antitrust Law and the Intellectual Property Protection  II 、 The Relationship between the Abuse of Intellectual Property Rights and the Elimination and Restriction of the Competition  III 、 The Relationship between the Intellectual Property Rights and the Dominant Market Position  IV 、 The Formulation of the Guidelines of the Enforcement of the Antitrust Law in the Field of the Intellectual Property Rights in PRC  V 、 Related Cases

3. 3 I 、 General Discussion on the Relationship between the Antitrust Law and Intellectual Property Protection Generally speaking, the Antitrust Law and the intellectual property protection are not contradictory, which is determined by the relationship between the Antitrust Law and the intellectual property protection. Generally speaking, the Antitrust Law and the intellectual property protection are not contradictory, which is determined by the relationship between the Antitrust Law and the intellectual property protection. Although the Antitrust Law and the intellectual property protection belong to two different areas separately, they can both fall into the basic economic policy and legal system of each country. Although the Antitrust Law and the intellectual property protection belong to two different areas separately, they can both fall into the basic economic policy and legal system of each country. On one hand, there is a consistency on the basic function and aim between the two; but on the other hand, in the specific respect, there are also obvious discrepancies between them, which may even generate some kind of conflicts. On one hand, there is a consistency on the basic function and aim between the two; but on the other hand, in the specific respect, there are also obvious discrepancies between them, which may even generate some kind of conflicts.

4. 4 Consistency: Arriving at the Same End though by Different Means First of all, they both have the basic function of promoting the competition and pushing forward the innovation. First of all, they both have the basic function of promoting the competition and pushing forward the innovation. The Intellectual Property Rights Law grants the operators important sole rights but with certain terms and protects such sole rights to reward the operators for their investment in the innovation. In this way, the Intellectual Property Rights Law can promote the innovation and meanwhile protect the fair competition in the market, and also can prevent the enterprises with dominant market position from harming or hindering the innovation. The basic aims of the Antitrust Law is to fight against the monopoly, to maintain a fair and free competition in the market, to keep the economic vitality, and to provide a pressure for the innovation. And this requires and also protects the operators to carry out normal competition among them in order to seek the way of innovation. The Intellectual Property Rights Law grants the operators important sole rights but with certain terms and protects such sole rights to reward the operators for their investment in the innovation. In this way, the Intellectual Property Rights Law can promote the innovation and meanwhile protect the fair competition in the market, and also can prevent the enterprises with dominant market position from harming or hindering the innovation. The basic aims of the Antitrust Law is to fight against the monopoly, to maintain a fair and free competition in the market, to keep the economic vitality, and to provide a pressure for the innovation. And this requires and also protects the operators to carry out normal competition among them in order to seek the way of innovation. Secondly, both of them have the same aim and function of protecting the interest of the customers. Secondly, both of them have the same aim and function of protecting the interest of the customers. The Intellectual Property Rights Law can not only increases the welfare of the customers on the whole by the way of encouraging the innovation and promoting the economic development, but also protects he customers from suffering the damage during the transaction by the way of preventing and punishing the infringement of intellectual property rights such like the fake commodities in the market. The Antitrust Law protects and encourages the competition in order to protect and realize the welfare of the customers, which is the most basic aim and function of it. The Intellectual Property Rights Law can not only increases the welfare of the customers on the whole by the way of encouraging the innovation and promoting the economic development, but also protects he customers from suffering the damage during the transaction by the way of preventing and punishing the infringement of intellectual property rights such like the fake commodities in the market. The Antitrust Law protects and encourages the competition in order to protect and realize the welfare of the customers, which is the most basic aim and function of it.

5. 5 On the basis of such consistency, the Antitrust Law should respect and protect the justifiable use of the intellectual property rights, and the restriction on the competition under this circumstance shall be deemed as the necessary price for the country to implement the system of intellectual property protection in order to encourage the innovation, and the Antitrust Law should be tolerant with this. On the basis of such consistency, the Antitrust Law should respect and protect the justifiable use of the intellectual property rights, and the restriction on the competition under this circumstance shall be deemed as the necessary price for the country to implement the system of intellectual property protection in order to encourage the innovation, and the Antitrust Law should be tolerant with this. Therefore, it has been stipulated in the Article 55 of the Antitrust Law of PRC that the Antitrust Law shall not be applied on the use of intellectual property right by the operators in accordance with relevant laws and regulations of the intellectual property rights. Therefore, it has been stipulated in the Article 55 of the Antitrust Law of PRC that the Antitrust Law shall not be applied on the use of intellectual property right by the operators in accordance with relevant laws and regulations of the intellectual property rights.

6. 6 The Discrepancies and the Possible Conflicts On the face of it, there are obvious discrepancies between the Intellectual Property Rights Law and the Antitrust Law. The Intellectual Property Rights Law is to grand and protect some sole rights, which means to restrict the competition, however, the Antitrust Law is to fight against the monopoly and protect competition. On the face of it, there are obvious discrepancies between the Intellectual Property Rights Law and the Antitrust Law. The Intellectual Property Rights Law is to grand and protect some sole rights, which means to restrict the competition, however, the Antitrust Law is to fight against the monopoly and protect competition. From the substantial respect, the actual conflicts between the two are not caused by the holding of the intellectual property rights, but caused by the specific use of the intellectual property rights, especially the unjustifiable use (abuse) of the intellectual property rights, which is, the owner of the intellectual property rights goes beyond the allowable scope of the laws or the justifiable line during the use of his rights, and unreasonably eliminates or restricts the competition of the market. From the substantial respect, the actual conflicts between the two are not caused by the holding of the intellectual property rights, but caused by the specific use of the intellectual property rights, especially the unjustifiable use (abuse) of the intellectual property rights, which is, the owner of the intellectual property rights goes beyond the allowable scope of the laws or the justifiable line during the use of his rights, and unreasonably eliminates or restricts the competition of the market. For the purpose of preventing the abuse of the intellectual property rights, the elimination and restriction of the competition, the Antitrust Law should regulate the use the intellectual property rights. For the purpose of preventing the abuse of the intellectual property rights, the elimination and restriction of the competition, the Antitrust Law should regulate the use the intellectual property rights.

7. 7 The protection of the intellectual property rights and the regulation on the abuse of the intellectual property rights by the Antitrust Law are consistent and have no conflicts in essence. The protection of the intellectual property rights and the regulation on the abuse of the intellectual property rights by the Antitrust Law are consistent and have no conflicts in essence. Such regulation does not mean the denying of the basic nature of the intellectual property rights, but actually defines the scope of the justifiable use of the intellectual property rights. Actually, the abuse of the intellectual property rights also goes against the basic aim of the country to establish the intellectual property protection system and protect the intellectual property rights. Such regulation does not mean the denying of the basic nature of the intellectual property rights, but actually defines the scope of the justifiable use of the intellectual property rights. Actually, the abuse of the intellectual property rights also goes against the basic aim of the country to establish the intellectual property protection system and protect the intellectual property rights. When it is stipulated in the Article 55 of the Antitrust Law of PRC that the Antitrust Law shall not be applied on the justifiable use of intellectual property rights, it is also stipulated that the Antitrust Law shall be applied on the operators’ abuse of intellectual property rights, as well as their elimination and restriction of the intellectual property rights. When it is stipulated in the Article 55 of the Antitrust Law of PRC that the Antitrust Law shall not be applied on the justifiable use of intellectual property rights, it is also stipulated that the Antitrust Law shall be applied on the operators’ abuse of intellectual property rights, as well as their elimination and restriction of the intellectual property rights. This provision not only reflects that the intellectual property rights need to be respected and protected, but also provides necessary restriction on the use of such rights. This provision not only reflects that the intellectual property rights need to be respected and protected, but also provides necessary restriction on the use of such rights.

8. 8 II 、 The Relationship between the Abuse of the Intellectual Property Rights and the Elimination or Restriction of the Competition It is quite important and also easy to cause disputes how to understand the relationship between the “abuse of the intellectual property rights” and the “elimination or restriction of the competition” prescribed in the Article 55 of the Antitrust Law of PRC. Actually it is also how to understand the relationship between the abuse of the intellectual property rights and the violation of the Antitrust Law. The abuse of the intellectual property rights has different definitions in different countries and regions, and different legal systems, and there is even not such kind of definition in certain countries and regions. In the PRC, the concept of the abuse of the intellectual property rights has not been defined clearly in the laws, so the understanding on this shall not be limited to the narrow scope of the case laws in some countries. Instead, it should be understood in a wider scope of meaning, and the abuse of the intellectual property rights is deemed as a relative concept with the justifiable use the intellectual property rights. Any act of the owner of the intellectual property rights of using his rights exceeding the allowable scope of the laws or the justifiable line, which results in the unjustifiable use of the rights and damage to the interest of others and the public society, can be defined as the. Any act of the owner of the intellectual property rights of using his rights exceeding the allowable scope of the laws or the justifiable line, which results in the unjustifiable use of the rights and damage to the interest of others and the public society, can be defined as the abuse of the intellectual property rights.

9. 9 As a concept with a very broad scope of meaning, although the touches on some issues of the Antitrust Law, it is not limited to, or even not the first issue of the Antitrust Law, because the As a concept with a very broad scope of meaning, although the abuse of the intellectual property rights touches on some issues of the Antitrust Law, it is not limited to, or even not the first issue of the Antitrust Law, because the abuse of the intellectual property rights first goes against the aim of the Intellectual Property Law to protect the public interest of the society, and meanwhile violates the basic principles of fairness, honesty and credit, forbidding the abuse of rights in the Civil Law. Even if the abuse of the intellectual property rights violates the competition laws, it not only relates to the Antitrust Law but also relates to the Laws Against Unfair Competition. For example, when the owner of the intellectual property rights sends a Warming Letter or uses the right of action inappropriately which causes reputational and economic damages of the competitor, this may also result in the distortion and obstruction of the normal market competition and may constitute the abuse of the intellectual property rights. However it is mainly relates to the violation of the Laws Against Unfair Competition or other laws. For example, when the owner of the intellectual property rights sends a Warming Letter or uses the right of action inappropriately which causes reputational and economic damages of the competitor, this may also result in the distortion and obstruction of the normal market competition and may constitute the abuse of the intellectual property rights. However it is mainly relates to the violation of the Laws Against Unfair Competition or other laws.

10. 10 It is generally recognized that the standard of judging whether there is an abuse of the intellectual property rights is that if the use the rights has violated the relevant public policies that the intellectual property rights would like to achieve, including not only the competition policies, but also innovation policies, freedom of expression policies etc. When the use of intellectual property rights violates the Antitrust Laws, there must be the abuse of the intellectual property rights, however, some (or even most) abuse of the intellectual property rights may not violate the Antitrust Law. There are a lot of acts existing between the lawful use of intellectual property rights and the violation of the Antitrust Law. Although they may not constitute the violation of the Antitrust Law, they may still constitute the abuse of the intellectual property rights. It is generally recognized that the standard of judging whether there is an abuse of the intellectual property rights is that if the use the rights has violated the relevant public policies that the intellectual property rights would like to achieve, including not only the competition policies, but also innovation policies, freedom of expression policies etc. When the use of intellectual property rights violates the Antitrust Laws, there must be the abuse of the intellectual property rights, however, some (or even most) abuse of the intellectual property rights may not violate the Antitrust Law. There are a lot of acts existing between the lawful use of intellectual property rights and the violation of the Antitrust Law. Although they may not constitute the violation of the Antitrust Law, they may still constitute the abuse of the intellectual property rights. However, since the Antitrust Law is one of the basic public policies of each country, and the nature of monopoly of the intellectual property rights itself determines that it is easy for the abuse of the intellectual property rights to violate the competition system protected by the Antitrust Law. Therefore, it is usually more obvious and specially highlighted that the abuse of the intellectual property rights constitutes the violation of the Antitrust Law. However, since the Antitrust Law is one of the basic public policies of each country, and the nature of monopoly of the intellectual property rights itself determines that it is easy for the abuse of the intellectual property rights to violate the competition system protected by the Antitrust Law. Therefore, it is usually more obvious and specially highlighted that the abuse of the intellectual property rights constitutes the violation of the Antitrust Law.

11. 11 Based on the knowledge of the relationship between the abuse of the intellectual property rights and violation of the Antitrust Law, it can be carried out separately when determining whether the use the intellectual property rights constitutes the abuse of the intellectual property rights or whether it constitutes the violation of the Antitrust Law. Each of them will not be constituted on the basis of the constitution of the other one, but in case that the use of the intellectual property rights violates the Antitrust Law, it meanwhile constitutes the abuse of the intellectual property rights. Based on the knowledge of the relationship between the abuse of the intellectual property rights and violation of the Antitrust Law, it can be carried out separately when determining whether the use the intellectual property rights constitutes the abuse of the intellectual property rights or whether it constitutes the violation of the Antitrust Law. Each of them will not be constituted on the basis of the constitution of the other one, but in case that the use of the intellectual property rights violates the Antitrust Law, it meanwhile constitutes the abuse of the intellectual property rights. In the understanding of the Article 55 of the Antitrust Law of PRC, it is not necessary to recognize first the said act of abuse of the intellectual property rights and then to review whether it has eliminated or restricted the competition. An act can be determined to have violated the Antitrust Law when some unjustifiable elimination or restriction of the competition happens on the basis of the use of the intellectual property rights (by which to differ from those justifiable use of intellectual property rights which may also cause some elimination or restriction of the competition) In the understanding of the Article 55 of the Antitrust Law of PRC, it is not necessary to recognize first the said act of abuse of the intellectual property rights and then to review whether it has eliminated or restricted the competition. An act can be determined to have violated the Antitrust Law when some unjustifiable elimination or restriction of the competition happens on the basis of the use of the intellectual property rights (by which to differ from those justifiable use of intellectual property rights which may also cause some elimination or restriction of the competition)

12. 12 III ﹑ The Relationship between the Intellectual Property Rights and the Dominant Market Position The relationship between the intellectual property rights and the dominant market position directly relates to the issue of the Antitrust Law about how to treat the speciality of the intellectual property rights, and further to decide how to apply the Antitrust Law on related act, in the strict or lenient way. There are different principles of analyzing and handling in different countries and during different periods. The relationship between the intellectual property rights and the dominant market position directly relates to the issue of the Antitrust Law about how to treat the speciality of the intellectual property rights, and further to decide how to apply the Antitrust Law on related act, in the strict or lenient way. There are different principles of analyzing and handling in different countries and during different periods. In the countries and periods where and when the policy of Antitrust Law is implemented very strictly, people usually emphasize the speciality of the intellectual property rights, and usually deem the ownership of the intellectual property rights as the possession of the dominant market position. In the countries and periods where and when the policy of Antitrust Law is implemented very strictly, people usually emphasize the speciality of the intellectual property rights, and usually deem the ownership of the intellectual property rights as the possession of the dominant market position. During a certain period before, both the US and the EU assumed that the monopoly of intellectual property rights itself would cause the monopoly power in the market, and they also assumed that all the licensing of intellectual property rights might cause the collusion between the competitors. During a certain period before, both the US and the EU assumed that the monopoly of intellectual property rights itself would cause the monopoly power in the market, and they also assumed that all the licensing of intellectual property rights might cause the collusion between the competitors. Since the year 1995, when the American Ministry of Justice and the Federal Trade Commission jointly published the Antitrust Guidelines for the Licensing of Intellectual Property (hereinafter refer to as the Antitrust Guidelines”), the antitrust organs of each country have changed their position on this matter greatly. Since the year 1995, when the American Ministry of Justice and the Federal Trade Commission jointly published the Antitrust Guidelines for the Licensing of Intellectual Property (hereinafter refer to as the Antitrust Guidelines”), the antitrust organs of each country have changed their position on this matter greatly.

13. 13 One of the three core principles stated in this Antitrust when an antitrust organ try to indentify whether the Antitrust Law has been violated, they should treat the intellectual property rights as the same as the other properties, and believe that although the intellectual property rights have the important and different characteristic compared with the other forms of property, tangible or intangible, the same principle shall still be applied on both the intellectual property rights and any other tangible or intangible properties referring to the Antitrust Law. One of the three core principles stated in this Antitrust Guidelines is that when an antitrust organ try to indentify whether the Antitrust Law has been violated, they should treat the intellectual property rights as the same as the other properties, and believe that although the intellectual property rights have the important and different characteristic compared with the other forms of property, tangible or intangible, the same principle shall still be applied on both the intellectual property rights and any other tangible or intangible properties referring to the Antitrust Law. Directly bound up with this, another core principle of this Antitrust Guidelines is that the antitrust organ does not assume that the intellectual property rights will cause the dominant power in the market, which means that the intellectual property right as a monopoly right does not result in the dominant power of the owner in the market. The reason is that there may be substitutes for the objects of the intellectual property rights like the patents, copyrights, or technical secrets etc. Directly bound up with this, another core principle of this Antitrust Guidelines is that the antitrust organ does not assume that the intellectual property rights will cause the dominant power in the market, which means that the intellectual property right as a monopoly right does not result in the dominant power of the owner in the market. The reason is that there may be substitutes for the objects of the intellectual property rights like the patents, copyrights, or technical secrets etc.

14. 14 Although holding of the intellectual property rights itself is not equal to holding the dominant market position, like any other property rights, sometimes the intellectual property rights are indeed an important or even the key factor for the enterprises to obtain the dominant market position. Here it need to follow the general analysis about the dominant market position. In general, when the Antitrust Law is applied in the field of intellectual property rights in some countries and regions, related acts are still analyzed within the general framework of the Antitrust Law. The use of the intellectual property rights is neither particularly restricted because of the inherent nature of monopoly of the intellectual property rights, nor given a way out because the intellectual property rights are protected by the laws. We should also hold this basic position when the Antitrust Law is applied on the intellectual property rights in China, which means that the antitrust organ should not presume that the operators owning the intellectual property rights hold the dominant market position in related markets. The ownership of the intellectual property rights shall not make the operators undertake special obligations, neither shall it become the operators’ reason to abuse their dominant market position.

15. 15 IV 、 The Implementation of the Antitrust Law of PRC in the Field of the Intellectual Property Rights The implementation of the Antitrust Law of PRC in the field of intellectual property rights is a wholly new and very significant thing, and meanwhile it is a sensitive, complicated and challenging issue. The implementation of the Antitrust Law of PRC in the field of intellectual property rights is a wholly new and very significant thing, and meanwhile it is a sensitive, complicated and challenging issue. The implementation of the Antitrust Law is per se an extremely complicated matter, because the Antitrust Law of each country has the general characteristic that the provisions of the Antitrust Law are quite in principle and the rules are in uncertainty. The implementation of the Antitrust Law is per se an extremely complicated matter, because the Antitrust Law of each country has the general characteristic that the provisions of the Antitrust Law are quite in principle and the rules are in uncertainty. The implementation of the Antitrust Law in the field of the intellectual property rights are usually more complicated, and it is faced with a complicated and sensitive problem of keeping a reasonable balance between encouraging innovation and protecting competition. The implementation of the Antitrust Law in the field of the intellectual property rights are usually more complicated, and it is faced with a complicated and sensitive problem of keeping a reasonable balance between encouraging innovation and protecting competition. Especially, it has been only one year of the implementation of the Antitrust Law in China and the experience of enforcement is obviously insufficient. Moreover the implementation of the Antitrust Law in the field of the intellectual property rights is a wholly new subject. Therefore the formulation of a Guideline on the enforcement of the Antitrust Law in the field of the intellectual property rights becomes extremely necessary. Especially, it has been only one year of the implementation of the Antitrust Law in China and the experience of enforcement is obviously insufficient. Moreover the implementation of the Antitrust Law in the field of the intellectual property rights is a wholly new subject. Therefore the formulation of a Guideline on the enforcement of the Antitrust Law in the field of the intellectual property rights becomes extremely necessary.

16. 16 According to the Article 9 of the Antitrust Law of the PRC, it is one of the obligations of the Antitrust Commission of the State Council to formulate and publish the Enforcement Guideline of Antitrust Law. And the Enforcement Guideline of the Antitrust Law in the field of the intellectual property rights shall be also issued by the Antitrust Commission of the State Council. According to the Article 9 of the Antitrust Law of the PRC, it is one of the obligations of the Antitrust Commission of the State Council to formulate and publish the Enforcement Guideline of Antitrust Law. And the Enforcement Guideline of the Antitrust Law in the field of the intellectual property rights shall be also issued by the Antitrust Commission of the State Council. According to the work schedule of the Antitrust Commission of the State Council, the Enforcement Guideline of the Antitrust Law in the field of the intellectual property rights shall be drafted by the State Administration for Industry and Commerce. The State Administration for Industry and Commerce adopted the form of research project and established a project research group in March 2009, and the research group is led by the Enforcement Bureau of Antitrust Law and Anti- unfair Competition Law of the State Administration for Industry and Commerce, and made up of the leaders of related Operation Office as well as relevant experts. According to the work schedule of the Antitrust Commission of the State Council, the Enforcement Guideline of the Antitrust Law in the field of the intellectual property rights shall be drafted by the State Administration for Industry and Commerce. The State Administration for Industry and Commerce adopted the form of research project and established a project research group in March 2009, and the research group is led by the Enforcement Bureau of Antitrust Law and Anti- unfair Competition Law of the State Administration for Industry and Commerce, and made up of the leaders of related Operation Office as well as relevant experts. The research group carried out a lot of preliminary preparation work, mainly including collecting the materials and documentations need to be referred to, comparing and analyzing these materials and documentations, making questionnaires and conducting research in related enterprises and other organizations, and holding several seminars etc. The research group carried out a lot of preliminary preparation work, mainly including collecting the materials and documentations need to be referred to, comparing and analyzing these materials and documentations, making questionnaires and conducting research in related enterprises and other organizations, and holding several seminars etc.

17. 17 On the basis of widely asking for the advise of every side, the research group prepared and completed the draft of the proposed Guideline, which at present is still seeking for further advise, being amended and perfected. On the basis of widely asking for the advise of every side, the research group prepared and completed the draft of the proposed Guideline, which at present is still seeking for further advise, being amended and perfected. When learning the experience of relevant countries and regions, and formulating the Enforcement Guideline of the Antitrust Law in the field of the intellectual property rights in China, we should clarify the basic position and analytical framework of the enforcement of the Antitrust Law in the field of the intellectual property rights, in the way of legislation to state the basic position and policies of the competent authority of the government on relevant matters. In addition, we need to classify the acts of eliminating and restricting competition involved in the use of the intellectual property rights, and set forth the boundary between the legal and illegal act. When learning the experience of relevant countries and regions, and formulating the Enforcement Guideline of the Antitrust Law in the field of the intellectual property rights in China, we should clarify the basic position and analytical framework of the enforcement of the Antitrust Law in the field of the intellectual property rights, in the way of legislation to state the basic position and policies of the competent authority of the government on relevant matters. In addition, we need to classify the acts of eliminating and restricting competition involved in the use of the intellectual property rights, and set forth the boundary between the legal and illegal act. Meanwhile, the State Supreme People’s Court also, by summarizing the experience in their trials, formulates specific judicial interpretations on the abuse of the intellectual property rights involved in the civil trial of the Antitrust Law, which is beneficial to the trial of related cases. Meanwhile, the State Supreme People’s Court also, by summarizing the experience in their trials, formulates specific judicial interpretations on the abuse of the intellectual property rights involved in the civil trial of the Antitrust Law, which is beneficial to the trial of related cases.

18. 18 V ﹑ Related Cases Sichuan De Xian Science and Technology Co., Ltd VS. Shanghai Suo Guang Electronics Co., Limited and Sony Corporation, A Case of Dispute on Monopoly In November 2004, the “Plaintiff”) filed a lawsuit against In November 2004, Sichuan De Xian Science and Technology Co., Ltd (the “Plaintiff”) filed a lawsuit against Shanghai Suo Guang Electronics Co., Limited and Sony Corporation (collectively as the “Defendants”) at the No. 1 Intermediate People’s Court of Shanghai.

19. 19 The Plaintiff alleged that from the 90s of last century The Plaintiff alleged that from the 90s of last century Shanghai Suo Guang Electronics Co., Limited (“Suo Guang”) started to produce the Lithium-Lon battery of Sony Corporation, which matched the digital video cameras, and digital cameras of Sony Corporation. The Defendants took advantage of the determinative market share of the Sony brand in China by attaching a technology called “InfoLTHIUM” on the Sony batteries. Such technology includes the Intelligent Key Identification System which generated an exclusive depending relation between the digital video cameras or digital cameras and the batteries. Without being decoded the batteries of other brands in the same industry can not be used in the digital video cameras or digital cameras of Sony. Therefore, the customer can only choose the batteries of Sony when they buy Sony’s digital products. The Plaintiff had to spend a million RMB to interpret the Intelligent Key Identification System of Sony in order to make self-produced battery called Pin Sheng Battery be used in the digital video cameras or digital cameras of Sony. The Plaintiff believed that the two Defendants had abused their dominant market position, misled the customers, and conducted binding sales, which had violated the Article 2 and Article 12 of the Laws of the People’s Republic of China Against Unfair Competition and constituted the unfair competition. The Plaintiff requested an order that the two Defendants should produce and sell digital video cameras and cameras and the mating The Plaintiff believed that the two Defendants had abused their dominant market position, misled the customers, and conducted binding sales, which had violated the Article 2 and Article 12 of the Laws of the People’s Republic of China Against Unfair Competition and constituted the unfair competition. The Plaintiff requested an order that the two Defendants should produce and sell digital video cameras and cameras and the mating Lithium-Lon batteries with the identification code, and pay jointly the plaintiff a compensation of 100,000 RMB as well as the reasonable expenditure of 100,000RMB.

20. 20 Suo Guang, one of he Defendants argued that:   1. Both of the digital products and the batteries of Sony produced by Suo Guang has been granted the intellectual property rights, and the intellectual property right itself allows the sole right. Suo Guang produced these products by being legally licensed and actually the Pin Sheng batteries produced by the plaintiff also used these intellectual property rights. Therefore, the plaintiff may be suspected of the infringement.   2. Currently the batteries of Sony are produced only for being used in the products of Sony. There is no Chinese standard for such battery, and the specification of such product has to be made by its original company. The Plaintiff has to follow such specification if it wants to produce the similar batteries.   3. There are differences between the intelligent Lithium-Lon battery and the ordinary Lithium-Lon battery. This technology has the function of exchanging the information. The purpose of this is to meet the needs of the products’ function and only this technology can make the products to show the exact time and warn the customers that the battery is to be out of electricity. In addition, the Lithium-Lon battery has some danger and the identification technology is also used to prevent the fake products, protect the security of the customer as well as its own intellectual property rights. 4. There was no legal basis for the claims of the Plaintiff. From the current related laws and regulations, the Plaintiff’s assertion that the Defendants’ act constituted monopoly had no legal basis. Sony Corporation, the other of the Defendants agreed with the Suo Guang’s opinion in the argument, and also believed that the production of the products involved in this case had been licensed by Sony Corporation, however, the batteries produced by the Plaintiff constituted the infringement. Sony Corporation is a duly registered Corporation in Japan, who had never produced or sold the products in China, therefore it should not be regulated by the Laws of PRC Against the Unfair Competition.

21. 21 After reviewing the facts of this case, the No. 1 Shanghai Intermediate People’s Court believed that the two Defendants had indeed added the technology called “InfoLTHIUM” on the digital video cameras, cameras, and their matched Lithium-Lon batteries. Such technology covered the patent technology, software program, and technical secrets etc. It was shown in the patent documentation that this technology is based on the exchange of information between the machine and the battery. By continually detecting and calculating the temperature of the battery, combining the data of the voltage, it could determine the left quantity of electricity and then achieve the object of showing exactly the quantity of electricity. As there should be a communication between the machine and the battery, it indeed needed to set up some parameter to carry out the conversation. However, at present no evidence has shown that the additional intelligent identification code had been installed on the digital video cameras and cameras by the two Defendants in order to exclude the use of the non-Sony batterier. Therefore, the Plaintiff’s assertion that the two Defendants had bound the Sony’s digital products and batteries by setting up identification codes has no basis of facts. Based on this, the Court overruled the claims of the Plaintiff in the judge. After the judge was made, both the Plaintiff and the Defendants did not apply for an appeal.

22. 22 Some Issues in This Case Left for Us to Think This case happened before the issuance of the Antitrust Law in our Country, but the content involved and the brief determined by the Court are both about the dispute of monopoly. So this case has been called the First Civil Case of Antitrust Law in our country. Also the case referred to the abuse of the intellectual property rights, so the public had paid close attention to this case. As there was no legal base of Antitrust Law at that time, the Plaintiff filed the lawsuit against the Defendant’s abuse of the dominant market position on the basis of the Laws of PRC Against Unfair Competition. Though the case ended with the Plaintiff losing the suit, there are still a lot issues left for us to think and discuss, which are :   If the lawsuit is filed according to the Antitrust Law, how can the parties produce the evidence on the basic facts like the sales volume, market share, and the replaceability of the products in the civil trial on the abuse of the dominant market position.   How shall the Court define the Related Market and determine the dominant market position based on the facts   How to identify the abuse of the intellectual property rights and the elimination and restriction of the competition?

23. 23 Thank You!