Abstract
In this article we develop a simple economic model to analyse the effects of injunctions obtained by the holders of standard essential patents (SEPs), which shows that patent hold-ups involve two types of behaviours in the context of SEP-encumbered fair, reasonable and non-discriminatory (FRAND) commitments. One is general trading hold-up, which is a phenomenon described in transaction cost economics; the other is an abuse of market power prohibited by anti-trust law and/or competition policy. Therefore, it is utterly vital to identify the proper role of private governance and anti-trust intervention. A FRAND commitment does not include a waiver of the right of the holder of an SEP to seek injunctions. The holder of an SEP still can obtain injunctions. However, the granting of injunctions for holders of SEPs should be limited in special circumstances, so as to balance the interests of patentee and user. The holder of an SEP seeking an injunction against a willing licensee may not necessarily constitute an abuse of dominance; anti-trust scrutiny needs to pay much attention to anti-competitive effects. China’s Patent Law lacks provisions regarding injunctive relief. China’s Civil Procedure Law is vague with regard to the granting of injunctions, as are relevant judicial interpretations by the Supreme People’s Court. The decision in InterDigital and the draft of the Anti-monopoly Guidelines (2017) in China demonstrate there are some issues which need to be resolved for the Anti-monopoly Law and the enforcement thereof.
Standard-essential patents and incentives for innovation