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Intellectual Property and Commercial Court


2011 Xing Kong Su Zi No. 3

Decision No. 2011 Xing Kong Su Zi No. 3
Date April 23, 2012
Decision Highlight

I. Patent right is a right with the strongest monopolistic effect among the intellectual property rights, so as to provide incentives upon the industrial development while preventing the industries from duplicated investment upon research and development, and in our country, a patent right can only be granted to the person who filed a patent application first despite that the same technology has been developed and completed by different persons, respectively, and an exclusive right is thereby legitimately provided to the patentee to exclude others from adopting the same technology during a certain period of time. A patent pool is that two or more patentees agree to cross-license their patent rights, or to license collectively to a third party for license administration and royalty distribution purposes, wherein a substitutional relationship (for example, different methods for manufacturing the same product) or a complementary relationship (for example, different components of a product being associated to different patents) may have existed among technologies included in the patent pool. A patent pool with substitutional technologies will cause unfavorable effects upon the competitive order because licensees will have to take in technologies with duplicative functions or properties at the same time, and thereby initiate constrains onto the competitive relationship of the substitutional technologies; whereas a patent pool with complementary technologies is able to lower down the transaction cost of patent licensing while preventing patentees of essential technologies from controlling or blocking the adoption of the essential technologies, so as to facilitate the utilization and promotion of a technical standard, and therefore, relevant products or services of a specific up-steam or down-stream market can conduct an effective competition with each other upon a platform associated with the same specification. Although there is no relationship of necessity between a patent pool and an establishment of a technical standard, regarding how to determine whether a patent is a complementary patent, while taking a technical standard as an example, it is to see whether the same is a key patent that is technically essential to serve the purpose of a specification designated for carrying out such technical standard. A patent pool does not necessarily possessing a dominant position in the market, however, if the patent pool is comprised of all the substitutional patents, then there will be no other substitutional technologies to be used by other enterprises for participating the competition in the market, or if the patent pool is comprised of the complementary patents that are technically essential while manufacturing products in line with the standard, then such patent pool will possess a relatively large market power and may thereby possess a dominant position.

II. In general, the price to a product or the compensation to a service is to be freely determined by an enterprise in accordance with the competition encountered and its cost structure; however, in the case where such enterprise possesses a dominant position in the market, it is stipulated in Article 10, Sub-Paragraph 2 of the Fair Trade Act that a dominant enterprise must not unduly determine, maintain or modify the price to a product or the compensation to a service, in order to avoid such enterprise from gaining excess profit by abusing its monopolistic power to determine the price unjustifiably. Nevertheless, whether a dominant pricing by a dominant enterprise shall be restricted should be determined in view of whether the price decided by the dominant enterprise is far more than the economic value of the product or service provided thereby, and therefore results in a misuse. It shall fall back to the nous for the function of pricing when determining whether the price is justifiable or not, that is, to analyze whether the determination of the price by the dominant enterprise is resulted from the law of supply and demand for the market, or otherwise, it can be presumed that the price determination is resulted from the dominant position and monopolistic power of the dominant enterprise.

Relevant statutes Article 5, Paragraph 3 and Article 10, Sub-Paragraph 2 of the Fair Trade Act
  • Release Date:2020-11-16
  • Update:2020-12-07