Striking a Balance between Enforcement of Antitrust and Intellectual Property Laws in a Developing C

1
Striking a Balance between Enforcement of
Antitrust and Intellectual Property Laws in a
Developing Country the Chinese Perspective

• Thomas K. Cheng
• The University of Hong Kong

2
Relationship between Antitrust and IP

• IP law focuses on dynamic efficienciesproviding
  sufficient ex ante incentives for innovation.
• Antitrust law focuses on allocative efficiencies
  efficient allocation of resources after the
  creation of intellectual property has taken
  place.
• Antitrust law also takes into account dynamic
  efficiencies.
• Balancing in Rule of Reason analysis.
• Antitrust and IP law enforcement from the
  consumers and the producers perspective.

3
Relationship between Antitrust and IP in
Developing Countries

• Depends on whether the country is a major IP
  producer.
• Dynamic efficiency considerations may lose much
  relevance in a developing country that does not
  produce much IP.
• Braga Fink higher standards of protection
  will likely displace local producers, raise
  prices, and transfer rent from consumers and
  producers to foreign title-holders, resulting in
  a negative welfare impact.
• Consideration of both domestic and foreign
  innovators interests.

4
Relationship between Antitrust and IP in
Developing Countries

• Keith Maskus as developing countries strengthen
  their IPR regimes they should attract rising
  import volumes.
• Ideal scenario selective enforcement of
  antitrust laws against foreign IP right holders.
  However, this is not attainable.

5
Relationship between Antitrust and IP in China

• Emerging major producer of IP.
• High production capabilities and still relatively
  low innovative capacity.
• Enhanced IP protection may not provide much extra
  incentive to foreign producers to invest in
  China.
• Consideration of foreign innovators interest,
  especially in light of the size of the Chinese
  market.

6
Dexian v. Sony

• Chinas first reported antitrust case involving
  an alleged IP misuse.
• Dexian is a Chinese lithium-ion manufacturer.
• Sony has a 20 share of the Chinese digital
  camera market.
• InfoLITHIUMa patented battery coding technology
  that prevents non-Sony batteries from being used
  on Sony digital cameras and video-cameras.
• Filed under Article 2 of the Law on Unfair
  Competition, which requires voluntariness,
  equality, fairness, and honesty in market
  transactions.
• Shanghai Peoples Intermediate Court No. 1.

7
Draft Anti-Monopoly Law

• Most recent draft is the June 22, 2006 draft.
• Article 55 deals with the relationship between
  antitrust and IP.
• Article 55 states that
• Where the undertakings utilize the intellectual
  property rights pursuant to the stipulations in
  laws and administrative regulations relating to
  intellectual property, this Law is not
  applicable. However, this Law is applicable to
  conduct by the undertakings eliminating or
  restricting competition by the abuse of the
  rights stipulated by the Intellectual Property
  Right Laws or administrative regulations.

8
Draft Anti-Monopoly Law

• Essential facilities doctrine in an earlier draft
  of the law, the April 8, 2005 draft.
• It has been taken out.
• Former draft Article 22 states that
• In the case that an undertaking is unable to
  compete with the undertakings with dominant
  market position without the access to a network
  or other infrastructures owned by those dominant
  undertakings in relevant market, the undertakings
  in dominant position shall not refuse to grant
  access to the network or other infrastructures to
  other undertakings at reasonable prices. However,
  the undertaking in dominant position may be
  exempted if it can establish that it is
  impossible or unreasonable to grant access to the
  network or other infrastructures to other
  undertakings on account of technology, security
  or other justifiable reasons.

9
Thank you.