Anti-Monopoly Law and Intellectual Property: Guiding Chinese Courts by “Typical Cases”

In the last edition of this newsletter, I pointed out that the success of Guiding Case No. 78 (concerning Tencent’s alleged abuse of its market position) in helping formulate the Guidelines of the Anti-Monopoly Commission of the State Council on Anti-Monopoly in the Field of Platform Economy (released in February 2021) may encourage the Supreme People’s Court of China to release more Guiding Cases of this type so as to provide the much-needed guidance related to anti-monopoly law.

Yet, apart from Guiding Cases (for more information about why they are China’s de facto binding precedents, see SINOTALKS.COM In Brief No. 2), legal practitioners, business executives, and other stakeholders must not forget about Typical Cases, another category of representative cases that the Supreme People’s Court can release to guide Chinese courts’ adjudication.  What are Typical Cases?  Why are they significant?

Guiding Cases vs. Typical Cases: A Crucial Difference

Released by the Supreme People’s Court for the purpose of “unify[ing] the application of law” in China, both Guiding Cases and Typical Cases summarize select cases’ basic facts, final decisions made by the courts, and related reasoning processes.  However, Guiding Cases are much longer than Typical Cases; the former are often multiple pages in length while the latter generally have a few short paragraphs only.

The crucial difference lies in the presence of a section titled “Main Points of the Adjudication” in each Guiding Case.  This section is not included in Typical Cases.  In the “Main Points of the Adjudication” section of each Guiding Case, the Supreme People’s Court summarizes legal principles derived from the Guiding Case and expects all Chinese courts handling similar cases to cite and apply these principles in the judgments of these similar cases.  Each Typical Case, instead, has a section titled “Typical Significance”, where the Supreme People’s Court describes in a short paragraph the significance of the Typical Case.

The brevity of Typical Cases must not, however, obscure their significance, which I will discuss after sharing an example of an interesting Typical Case.

An Anti-Monopoly Typical Case Concerning Standard-Essential Patents

In September 2021, the Supreme People’s Court released three Typical Cases that are related to anti-monopoly law.  One of them summarizes a full-text ruling rendered by the Supreme People’s Court itself in December 2020 regarding a dispute involving Guangdong OPPO Mobile Telecommunications Corp., Ltd. (“OPPO”) and Sisvel International S.A. (“Sisvel”).

As reported in the approximately 800-word Typical Case, OPPO, a “global smart terminal manufacturer and mobile internet service provider”, and its branch in Shenzhen, brought suit in the Guangzhou Intellectual Property Court against Sisvel and its subsidiary in Hong Kong.  OPPO essentially claimed that Sisvel and its subsidiary (1) “own standard-essential patents (“SEPs”) related to the wireless communication field and have a dominant market position”; (2) “abused their dominant market position” by, among other acts, “charging unfairly high licensing fees” “in violation of the ‘fair, reasonable, and non-discriminatory’ (FRAND) principles” that owners of SEPs are required to follow; and (3) “initiated lawsuits in different countries for the same patents, causing negative impact on the business of OPPO and its Shenzhen Branch and economic losses”.  The Sisvel side argued that the Guangzhou Intellectual Property Court did not have jurisdiction over the case.  Finally, in the appeal, the Supreme People’s Court ruled against the Sisvel side largely on the following grounds, as reported in the Typical Case:

[…] in view of the special nature of the standard-essential patent licensing market and the fact that Sisvel International S.A.’s filing of patent infringement lawsuits in other countries may have caused a direct, substantive, and significant effect of excluding and restricting the competition of OPPO et al. in the relevant domestic market, Dongguan City, Guangdong Province, where OPPO is domiciled, can be used as the place where the infringement result of this case occurred, and[, therefore,] the Guangzhou Intellectual Property Court has jurisdiction over this case.

The Typical Case ends with a short paragraph describing various reasons for the significance of this case, including: “Based on the principle of extraterritorial application stated in Article 2 of the Anti-Monopoly Law, the ruling in this case […] clarifies the jurisdictional rules for monopoly disputes involving international standard-essential patents.”

Typical Cases: Their Significance

• Where Typical Cases Stand in China’s “Search for Similar Cases” System

Despite the brevity of Typical Cases, they have a special status in China’s fledgling “Search for Similar Cases” system.  According to a set of rules on this system released by the Supreme People’s Court in July 2020, Chinese judges are instructed to search for similar cases and learn from them before rendering judgments for select types of pending cases.  The search follows a specific order stated in the rules, with the search for similar Guiding Cases taking priority, followed by the search for similar Typical Cases.  The search for many other types of representative cases is ranked even lower.  Once a similar case has been retrieved from a group of cases ranked higher in the order stated in the rules, no further search is required.  Thus, as reflected in this search order, Typical Cases are not as significant as Guiding Cases but are still quite significant.

The use of a Typical Case that is found to be similar to a pending case is also more limited than that of a similar Guiding Case.  When a Guiding Case is found to be similar to a pending case, the court handling the pending case is expected to “reference and imitate” the Guiding Case by explicitly stating in the judgment of the pending case the “Main Points of the Adjudication” of the Guiding Case.  If a similar Typical Case is found, it cannot be stated in the judgment of the pending case.  However, it can be submitted by either party of the pending case to substantiate the party’s arguments, and the court may respond during the trial to explain its opinion about the submitted Typical Case.  Because a Typical Case essentially reflects the views of the Supreme People’s Court regarding the issues addressed therein, Chinese judges are likely to adopt the same views unless the Typical Case can be distinguished.

• Potential to be “Upgraded” to Guiding Cases

All of the above shows that while Typical Cases are not as significant as Guiding Cases, they do bear a degree of significance that serious legal practitioners must not ignore.

In addition, it is worth noting that select Typical Cases may be later upgraded to Guiding Cases.  Guiding Case No. 107 is an example.  Concerning a dispute over a contract for the international sale and purchase of goods between Sinochem International (Overseas) Pte. Ltd. and ThyssenKrupp Metallurgical Products GmbH, Guiding Case No. 107 establishes these important principles in its “Main Points of the Adjudication” section:

1. [Where] all parties to a contract for the international sale and purchase of goods are located in countries that are contracting states to the United Nations Convention on Contracts for the International Sale of Goods, the provisions of the convention should be applied with priority, and [if] a matter is not provided for in the convention, the applicable law agreed upon [by the parties] in the contract shall be applied. The United Nations Convention on Contracts for the International Sale of Goods should not be applied if parties to a contract for the international sale and purchase of goods clearly exclude the application of the convention.

2. In a contract for the international sale and purchase of goods, if the goods delivered by the seller have flaws, the situation should not be regarded as one that constitutes a fundamental breach of the contract stated in the United Nations Convention on Contracts for the International Sale of Goods, so long as the buyer can, through reasonable efforts, use or resell the goods.

Will the aforementioned Typical Case concerning the anti-monopoly dispute between OPPO and Sisvel be upgraded to a Guiding Case?  If this occurs, the Supreme People’s Court’s reasoning, including its analysis of relevant legislation, can be covered in more detail.  Even more importantly, guiding principles in the form of “Main Points of the Adjudication” can be provided and then applied by courts across the country in similar subsequent cases.  Let’s see how this interesting area continues to evolve.

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^† The citation of this article is: Dr. Mei Gechlik, Anti-Monopoly Law and Intellectual Property: More Guidance for Chinese Courts, SINOTALKS.COM, In Brief No. 4, Jan. 26, 2022, https://sinotalks.com/inbrief/week03-2022-english.  This article was first published on LinkedIn on January 19, 2022, https://www.linkedin.com/pulse/anti-monopoly-law-intellectual-property-more-guidance-mei-gechlik.

The original, English version of this article was edited by Nathan Harpainter.  The information and views set out in this article are the responsibility of the author and do not necessarily reflect the work or views of SINOTALKS.COM.