Boundaries between fair use and abuse of IP rights

The legislative intent of intellectual property (IP) law is to encourage and protect innovation, and confer legal rights on IP rights owners to restrict others from using their IP, as well as charge a licence fee. However, it may impede fair competition and technological innovation if we go beyond these boundaries to exercise these rights. As for IP rights owners, a question worth considering is how to identify the boundary between proper exercising of rights and abuse of rights, and how to appropriately and fully exercise their rights.

In recent years, it’s noticeable that China has strengthened its protection of IP rights, and many of the major laws have been amended several times, or are under continuing revision. However, there are few regulations or rules that specifically target abuse of IP rights. In addition to IP provisions under the Anti-Monopoly Law (AML), the effective law concerning abuse of IP rights is the State Administration for Industry and Commerce’s (SAIC) Pro-visions on Prohibiting the Abuse of Intellectual Property Rights to Preclude or Restrict Competition.

There are other laws not yet in force, including the Guidelines on Anti-Monopoly against Abuse of Intellectual Property Rights (Draft for Soliciting Opinions) drafted by the National Development and Reform Commission (NDRC) and the Guidelines on Anti-Monopoly Enforcement Against Abuse of Intellectual Property Rights (seventh draft of the SAIC).

Zhao Ping is a senior partner and head of the Shanghai office at Jincheng Tongda & Neal; Frank Liu is a partner at the firm