China's MIIT Issues New Draft Intellectual Property Template


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Recently, a draft of the Intellectual Property Rights Policy Template of Industry Standardization Organization (“the Template”) was released for soliciting opinions by the Intellectual Property Center, the Ministry of Industry and Information Technology.

The Template is aimed to help industry standardization organizations to properly deal with Intellectual Property Rights (“IPR”) issues. Industry standardization organizations refers to professional standard bodies that makes and publishes standard applied in certain filed, and industrial institutions, academic bodies or national defense institutions that engages in standardization in their
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functional areas. For instance, China Communications Standards Association (CCSA) is a standard organization in the field of communications technology. It is worth of noting that the Template is neither mandatory rules nor regulations, however, it provides guidelines of IPR process for the industry standardization organizations when making or amending industry standards in future.

Generally, the Template states rights and obligations of standardization organization members relating to IPR issues in the process of making and amending standard. Such Template is not only helpful to regulating the right holders’ behavior, but also mitigating IPR legal risk faced by the standard executor when adopting the standard. Some highlights of the Template are summarized as followings:

Disclosure of IPR Information

The Template requires member representative and author of contribution (if any) to promptly disclose to standardization organization the existence of patents and published patent applications that may contain necessary claim of the member or its affiliates to the extent of the representative’s or author’s knowledge . It also encourages members of standardization organization to disclose information regarding patents and published patent applications that may contain necessary claim, including but not limited to, the patentee’s and/or applicant’s name, patent numbers or patent application numbers.

IPR Licensing

1. Implied Licensing Obligation Form

When signing an standardization organization member agreement, the Template stipulates that each member shall submit an “Implied Licensing Obligation Form” to identify implied licensing obligations relating to any of its potential necessary claim to any technology adopted in the final standard which has not been disclosed in the standard making process. The said members may choose from the following obligations listed in the said Form: 1) Fair, reasonable and non-discriminatory, royalty-free (FRAND RF) license; 2) Fair, reasonable and non-discriminatory (FRAND) license; or even 3) No licensing obligation under certain circumstances.

Besides, it also provides that when making and amending the standard, the member shall submit a written, irrevocable patent licensing statement with respect to all the necessary claims of the member that have been disclosed and potentially incorporated in the final standard. Such statements shall incorporate one of the three licensing conditions (FRAND RF/FRAND/No licensing). The commitments to grant the said patent licenses under the Template will extend to all members and their affiliates and all third parties who implement the corresponding part.

2. No Injunctive Relief

According to the Template, a member shall not seek injunctive relief against a potential licensee based on alleged infringement of a necessary claim unless such potential licensee is not subject to the jurisdiction of, refuses to participate in, or fails to comply with the result of, an independent adjudication of FRAND licensing terms.

3. Factors for Reasonable Royalties

With respect to factors for the reasonable royalty under the FRAND terms and conditions, the Template lists four factors to be taken into considerations, such as the total aggregate royalties that may apply if other owners of intellectual property demand similar terms; the degree of innovativeness of the necessary claim in the standard, the technical area of the standard, the nature of the standard, the implementation scope of the standard etc. However, the royalties shall not include the value relating to inclusion of the necessary claim after it is incorporated into the standard.

4. Reciprocity Requirements

The FRAND terms and condition under the IPR policy may incorporate reciprocity requirements. For instance, in the same standard, if the licensee does not practice its commitment to license its necessary claims for the same FRAND RF or FRAND standard to a member or its affiliates, the member and its affiliates will have no obligation to offer to license their necessary claims to the licensee.

5. Defensive Suspension Right

The said FRAND terms and conditions may also include defensive suspension right, which means that a licensor may suspend the FRAND license, if a licensee asserts a necessary claim against such licensor or its affiliate and alleges that the claim is essential to the same standard.

Conclusion

Even though the Template is not mandatory for standardization organizations to comply with, it still sets up good example and provides useful guidelines, including but not limited to IPR information disclosure, implied licensing obligations, terms and conditions of licensing, royalties factors etc., for these organizations to deal with IPR issues when they are making or amending industry standards. In future, industry standardization organizations may refer to the contents and basic concepts in the finalized Template when it comes to make their own IPR policies. By adopting an IPR policy like this, it will be helpful to better balance the interests of IPR holders, standard implementers and the public. The deadline for opinion soliciting is January 30, 2015.

ABOUT THE AUTHOR: Fei Dang
Fei Dang is an Associate in the MMLC Group.

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Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.

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