01 July 2008

Avoid competition problems in China

China's long-awaited Anti-Monopoly law comes into effect on August 1, but its impact on IP owners is far from certain, explain Kirstie Nicholson and Zirou Liu

One-minute read

China's Anti-Monopoly law was promulgated on August 31 last year and is due to come into effect on August 1 this year. As is usual in China, the wording of the law, including the sections that deal with IP, is quite vague. But the implementing regulations promised when the law was passed have not yet appeared. This has led to a lot of uncertainty among foreign businesses in China, which culminated in rumours at the end of June that SIPO had already begun an investigation into monopolistic practices by Microsoft. SIPO swiftly denied any involvement. This article looks closely at the wording of the Law itself and also at the EU precedents that may provide clues as to how China might enforce its Anti-Monopoly Law.

Intellectual property grants a monopoly that enables the right holder to prevent others from manufacturing, distributing, selling or using products that make use of the relevant intellectual property. Competition law, including China's Anti-Monopoly Law (AML), on the other hand, aims to prevent a monopoly situation and to safeguard fair market competition. However, IP and competition laws do also have certain common aims, including the promotion of innovation and the protection of consumers. It is therefore possible for IP rights to exist within the permitted boundaries of competition laws; however, where actions are taken that go beyond the legitimate protection of IP, competition concerns may arise.

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Avoid competition problems in China

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