On November 8, 2024, China’s State Administration for Market Regulation (SAMR) released its newly revised Antimonopoly Guidelines for Standard Essential Patents (标准必要专利反垄断指引) (国市监反执一发〔2024〕102号 (the “2024 Guidelines”). The 2024 Guidelines finalized a prior draft that had been released for public comment on June 30, 2023 (标准必要专利领域的反垄断指南) (公开征求意见稿的公告) (the “2023 Guidelines”), which went into effect simultaneously with publication.   On June 29, 2023, SAMR also released the amended Provisions on Prohibiting the Abuse of Intellectual Property Rights to Exclude or Restrict Competition (禁止滥用知识产权排除、限制竞争行为规定) (the “2023 IP Abuse Guidelines”). The 2023 IP Abuse Guidelines were effective on August 1, 2023. The 2023 IP Abuse Guidelines replaced the April 8, 2015 rules of the former State Administration for Industry and Commerce on “Prohibiting Abuse of IP to Exclude or Restrict Competition” (关于禁止滥用知识产权排除、限制竞争行为的规定).

Status and History of the 2024 Guidelines

This complicated 2023 IPR/Antimonopoly rulemaking “choreography” from different agencies stretches back over a decade, making it difficult to assess the import of new guidelines and their impact on actual Antimonopoly Law (AML) enforcement. The changing relations between the various types of legislation at play involving the AML, the rearrangement of agencies engaged in AML policy-making of the last several years, SAMR’s own restructuring of its AML authority in 2020,  the continuing importance of judicial decision-making, and the rapidly evolving nature of China’s economy, have also further complicated the policy landscape.

It is of fundamental importance that the 2024 Guidelines are not compulsory by their own terms (Article 21). Under China’s Law on Legislation, they are distinguished from higher-level “regulations” (fagui法规), passed by the State Council, and have no binding effect upon the courts. They are at a lower level than “laws” (falv 法律) passed by the National People’s Congress. They are likely “ministerial rules” (部门规章 bumenguizhang) or “normative documents” (guifangxingwenjian 规范性文件), which have limited binding impact and are inferior to laws and regulations. They are likely inferior as well to sui generis guidelines promulgated by the interagency Antimonopoly Commission (“AMC”), which are expressly authorized to be enacted by the Antimonopoly Law (rev. 2022). An example of this inferiority is that the 2024 Guidelines state that if there is an issue that is not covered by them, one should consult the Antimonopoly Guidelines on IP promulgated by the AMC ( 国务院反垄断委员会关于知识产权领域的反垄断指南) (2019) (Art. 21), and not the 2023 IP Abuse Guidelines. Nonetheless, in the realpolitik of China’s legal environment, compliance with the guidelines of Chinese agencies with authority over one’s conduct is often of primary importance, whatever the nominal legislated source of that authority. 

Sadly, it appears that the 2024 Guidelines did not comply with prior commitments made by China to provide a 30-60 day notice and comment period before implementing new rules, including specific commitments when proposed rules involve standards, corresponding legislation, and a high-level bilateral commitment made in the now defunct US-China Strategic and Economic Dialogue “to publish in advance for public comment, subject to specified exceptions, all trade and economic-related administrative regulations and departmental rules that are proposed for adoption, and provide a public comment period of not less than 30 days from the date of publication”.

Some of the antecedents to the 2024 and 2023 Guidelines are described in my blogs of 2014 (Proposed SAIC IP Abuse Rules), 2014 (ABA Conference on 8^th Draft of SAIC IP Abuse Rules),  2015 (Release of SAIC IP Abuse Rules),  2015 (Comments on NDRC IP Abuse Rules), 2016 (Comments on NDRC and SAIC IP abuse guidelines) and 2016 (additional comments), a 2020 blog on unfairly high pricing in IP AML investigations, as well as in the book I coauthored on Antimonopoly Law and Practice in China (2011) (pp. 235-244) which considered some of the efforts by non-antitrust agencies, such as the Standardization Administration of China, SIPO, NDRC’s pricing bureau, and the courts to regulate IP abuse,  among other writings.

A complete translation of the 2024 Guidelines by ChinaIPlawupdate is available here. Fangda Partners summarized key changes made by the 2024 Guidelines. The 2023 Guidelines are also available in a partial translation here. The Chinese original is here. KW Mallesons has also published a valuable description of the old rules, and Toby Mak has prepared his own insightful comparisons. 

The 2024 Guidelines introduce important provisions not found in the 2023 Guidelines. These changes may signal changes in future enforcement efforts and allocation of SAMR resources. For example, Article 5 calls for greater preventative self-governance against possible monopolistic activities by encouraging SEP owners to disclose SEP information and conduct good faith negotiations with standard implementers.  Articles 6, 7, and 8 set forth “good practices” for parties to a SEP license, including disclosure of information, implementing FRAND commitments, and good faith (shanyi 善意 ) negotiations. These good faith negotiation practices might be compared with judicial guidelines previously developed by the Guangdong and Beijing IP courts, including the adoption by the courts of an obligation to negotiate with “honesty and trustworthiness” (chengshixinyong 诚实信用) （Article 7 of the Civil Code）(See, e.g., Huawei v. Samsung, Oppo v. Nokia).

Failure to comply with preventative measures does not constitute an antitrust violation per se (Art. 7). Nonetheless, compliance is considered a factor to consider in abuse of dominance cases (Chapter 4).The 2024 gui delines state that deviation from a FRAND commitment is an “important consideration” in determining whether there has been a violation of the AML. However, one suspects it could be a significant consideration (Arts. 6, 7). To ensure compliance with the AML, a key factor should also be whether the FRAND negotiations hurt competition in complying with Art. 68 of the AML (2022 revision), which requires that the AML “applies to undertakings’ abuse of intellectual property rights to eliminate or restrict competition.”

In its definition of good faith negotiations for a FRAND license, SAMR requires that the SEP owner should “make a clear licensing negotiation offer to the standard implementer, which shall usually include a list of standard essential patents, a comparison table of a reasonable number of standard essential patents and standards, the calculation method and basis of the licensing fee rate, a reasonable feedback period, and other specific contents;.”  (Art. 8.1) (（一）标准必要专利权人应对标准实施方提出明确的许可谈判要约，通常包括标准必要专利清单、合理数量的标准必要专利与标准的对照表、许可费率的计算方法及依据、合理的反馈期限等具体内容). The changes in this provision from the 2023 Guidelines suggest that SAMR has begun to understand that requiring disclosure of all SEPs for companies with large portfolios can be an onerous task. Changes made from 2023 to the 2024 Guidelines include: establishing that a  “list of SEPs” is “usually” done, thereby implying that it may not need to be always done; the comparison table now only needs to include a “reasonable number” of SEPs rather than all; and a “calculation method” and “licensing rate” are to be included in the offer. Regrettably, Article 8.1 also suggests possible continued reliance on the quantity of SEPs rather than qualitative considerations.

Article 13 addresses abuse of dominance cases involving licenses of SEPS at “unfairly high prices.”  In determining whether a price-based abuse of dominance has occurred, a provision was thankfully removed from the 2023 Guidelines that looked to whether the license fee was “higher than development costs”  (2023 Guidelines Art. 13.2). Article 13 of the 2024 Guidelines, which modified Article 12.3 of the 2023 Guidelines, also directs SAMR to consider “Whether the license fee is significantly higher than comparable historical license fees or the license fees of other operators” (许可费是否明显高于可以比照的历史许可费或者其他经营者的许可费). The comparable provision in the 2023 Guidelines looked to “whether the license fee is significantly higher than the comparable historical license fee or a standard license fee” (许可费是否明显高于可以比照的历史许可费或者许可费标准). This language suggests that implementers are authorized to demand that any low license fee granted to other previous implementors benchmark their license. This disincentivizes implementors from taking an early license. This approach also prolongs continued preferential treatment for Chinese licensees that could run afoul of WTO national treatment obligations in licensing by requiring lower rates determined by Chinese agencies to Chinese licensees without sufficient economic justification (TRIPS Arts 3, 4 and fn. 3).  

The 2023 and 2024 Guidelines also seek to invalidate or control mechanisms for dispute settlement and related provisions regarding misuse of legal remedies. Article 16.5 of the 2024 Guidelines prohibits “restricting the licensee’s freedom in choosing the mechanism and location of dispute resolution”  (see also 2023 Guidelines,Art 17.5).   The 2024 Guidelines state that an AML issue may arise from a “request of the courts or other relevant departments to make judgments, rulings, or decisions prohibiting the use of relevant intellectual property rights, forcing the licensee to accept unjustly high prices or other unreasonable trading conditions” (Article 18). Article 18 raises several concerns regarding its implementation. For example, will SAMR challenge an agreement to arbitrate or litigate a SEP dispute or punish such behavior? Will SAMR consider issuing an “anti-suit” administrative order? How will SAMR resolve international and domestic law conflicts regarding arbitration or litigation of international commercial disputes? How will SAMR handle issues of international comity involving deference to foreign courts and agencies? Etc.

To the extent these dispute resolution provisions are applied internationally, they may also conflict with the EU position at the WTO regarding antisuit injunctions (“ASIs”). The EU opposes Chinese ASIs because, absent consent of the parties, “only the courts of the countries for which the patents are granted are competent to rule on the validity of those patents and take action against their infringement. If SEP owners are prohibited from resorting to the courts of the countries where their exclusive rights can be enforced, they are in practice deprived of those rights” (Para. 369 of First Written Submission of the European Union, June 8, 2023 in DS611- EU/China Enforcement of Intellectual Property Rights). In contrast to this territorial approach,  the 2024 Guidelines appear to support the efforts of Chinese courts to impose extra-territorial global rates for licensees on licensors.

The 2024 and 2023 Guidelines recognize that patent pools can promote competition by lowering costs and increasing licensing efficiency. The 2024 Guidelines further note that bilateral licensing by SEP owners to implementors should generally not be restricted by patent pools (Art. 10.3). USDOJ has also taken this position. It may conflict with the recent, unpublished Supreme People’s Court TCL v. Access Advance decision.

Continuing Chaos in Translation

I have previously written on erroneous judicial translations of FRAND. The 2023 and 2024 Guidelines consistently translate FRAND differently – and more accurately – from the erroneous judicial translation used in approximately 65% of published Chinese court FRAND decisions. SAMR’s translation in the 2023 and 2025 Guidelines easily reverse translates FRAND back into English as “Fair, Reasonable and Non-Discriminatory” (公平、合理和无歧视原则). Oddly, the 2023 IP Abuse Rules issued by SAMR follow the inaccurate translation practice that is widely used by the courts,  which uses a Chinese enumerative comma  [、] ( 公平、合理、无歧视) and removes the “and” from FRAND. A reverse translation back into English of this type of FRAND translation could be “fair and/or reasonable and/or non-discriminatory.” I base this translation of the enumerative comma on several Chinese sources, including the Legislative Technical Specifications (Trial) (1) issued by the National People’s Congress,  Standing Committee, (2009) No. 62《立法技术规范（试行）（一）》（全国人大常委会法制委员会文件法工委发（2009）62号） which notes that when the Chinese enumerative comma is used, there should be an “and” or an “or.” A similar conclusion regarding the translation of the Chinese enumerative comma was also reached in a WTO proceeding where a WTO panel determined that the Chinese enumerative comma “has no precise English equivalent.” It can be replaced by the “slash” ([/]) meaning “and/or.” (see footnotes 381 and 382 and accompanying text).   There have also been several Chinese court cases interpreting enumerative commas and a related national standard on its use, all of which support the inclusion of a clarifying conjunction.

One regrettable consistency ofSAMR’s 2024 Guidelines translations with erroneous judicial interpretations concerns the translation of “fair.”  Many European languages, as well as Turkish, Indonesian, and Malay, translate the vague English term “fair” into their native language as “equitable” or “just.” The Japanese and Korean translations for FRAND similarly use the Chinese characters for “fair,” meaning “just” (gongzheng 公正 ), rather than the Chinese character meaning “fairly priced” or “equally priced” (gongping 公平). “Equally priced” or gongping interjects a substantive distinction from “RAND” standards, which lack an explicit concept of equality in pricing. The Chinese courts have also referred the ETSI definition of “fairness” to the Civil Code (Art. 6), rather than to French law governing FRAND.  The reference in the 2024 Guidelines to licensing at an “unfairly high price”  (bugongping gaojia 不公平高价) （Arts.  4, 7, 13, 18）can therefore mean prohibiting a price that is unequal, regardless of how “fair” it might otherwise appear, with that determination being made according to Chinese civil law.

 An Iterative Process and An Experimental Approach

It is tempting to view the 2024 Guidelines in light of other developments, including at the WTO, in the EU’s proposed regulation of SEPs, and in light of Chinese and foreign judicial FRAND cases. I also view these guidelines as part of an iterative or experimental process. Rules such as these can pave the way for more detailed and higher-level legislation in the future. While frequent changes in rules may make it difficult to comprehend their temporal significance and even suggest instability, this iterative, experimental approach is, at the same time, a strength of the Chinese legislative and administrative system. The approach invites continuous attention to new developments and allows frequent reconsideration. This approach permits Chinese agencies to, in the words of Deng Xiaoping, “cross the river by feeling the stones.”  

During periods of more robust bilateral exchanges between the US and China on IP, this type of rulemaking was also often a topic of bilateral training programs, negotiations, and other exchanges. One hopes such exchanges will begin again, as they would be in both countries’ best interests.

Your comments are greatly appreciated!