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Why should foreign firms in China obey the local laws?

qualcomm antitrust, Anti-Monopoly Law, ndrc


China's economic and industrial transformation is occurring so rapidly that foreign companies often fail to appreciate the risks of doing business in the country. This is particularly true in the sphere of intellectual property (IP), where companies now enjoy much greater protections but have simultaneously been tripped up by competition regulators' increased scrutiny of their patent and licensing practices.

国的经济和工业转型非常迅速,以至于外国企业往往不明白在华经营的风险。在知识产权领域尤其如此——如今企业在这方面享有的保护比过去大得多,但同时它们也对反垄断机构加大对其专利和许可实践的审查措手不及。

 

China's ability to protect patents has grown after decades of non-existence and non-enforcement. In 10 years, the number of patent litigations filed has more than quadrupled, with close to 10,000 cases submitted last year.

经过毫无专利保护和专利执法的几十年后,中国保护专利的能力有所增长。过去10年里,中国专利诉讼数量增长了4倍多,去年接近1万宗。

 

The Chinese government's new specialised IP courts now provide companies with an enforcement mechanism comparable to, if not better than, those in Europe and the US. Litigation in China also offers many advantages to patent owners, including win rates above 75 per cent (and even higher for foreign patentees), injunction rates above 95 per cent, short time to trial, scant discovery and low costs (less than one-tenth of those incurred in the US). Most importantly, because so many supply chains pass through China, a single litigation can effectively impose a global ban on sales of a disputed product.

中国政府新设立的知识产权专业法庭现在为企业提供了可以媲美(如果不是更好的话)欧洲和美国的执行机制。在中国打官司也为专利所有者提供了许多优势,包括超过75%的胜诉率(外国专利持有人的胜诉率甚至更高)、超过95%的禁令率、审理快、无须举证且成本低(不足美国花费的十分之一)。最重要的是,由于如此多的供应链通过中国,一宗简单的诉讼就可以有效禁止有争议产品的全球销售。

 

But not all patent owners should rejoice. Along with a strengthening of the patent system has come increased enforcement of China's 2008 Anti-Monopoly Law (AML). Over the past three years, China's National Development and Reform Commission (NDRC) has beefed up staffing levels and raised its price-related investigations fourfold.

但并非所有的专利所有者都应该欢呼。在加强专利体系的同时,中国加大了对2008年出台的《反垄断法》的执行力度。在过去3年里,中国发改委(NDRC)充实了人员编制,其价格相关调查数量增加了4倍。

 

In 2013, the NDRC imposed price-fixing fines of Rmb353m on six Korean and Taiwanese LCD panel manufacturers. Last year the NDRC began investigating InterDigital, a US wireless technology company, after complaints by Chinese companies. InterDigital subsequently reached settlement agreements with the Chinese complainants and, in an undertaking with the NDRC, said it would scale back the royalty rates it charges.

2013年,发改委对6家韩国和台湾LCD面板制造商开出了3.53亿元人民币的罚单,指控其操纵价格。去年,发改委在接到中国公司的投诉后开始调查美国无线科技公司InterDigital。InterDigital随后与投诉的中国公司达成和解协议,并向发改委承诺,将削减收取的使用费费率。

 

The NDRC also probed US technology giant Qualcomm on similar grounds and, earlier this year, imposed a record penalty of Rmb6.1bn. Qualcomm agreed to stop some of its "patent bundling" practices and lowered certain royalty rates by one-third.

发改委还基于类似理由对美国科技巨头高通(Qualcomm)展开调查,并在今年早些时候对该公司处以61亿元人民币的创纪录罚款。高通同意停止某些“专利打包”行为,并将某些使用费费率降低三分之一。

 

AML penalties and fines in China can be extreme. But in the case of Qualcomm, perhaps the worst consequence of its run-in with the NDRC was the separate antitrust inquiries that followed in South Korea, the European Union and US.

中国反垄断法的处罚和罚款可能有些极端。但就高通而言,与中国发改委发生摩擦的最糟糕的后果或许是韩国、欧盟和美国随后分别展开反垄断调查。

 

There are a number of steps that companies can take to minimise the risks posed by regulatory investigations.

企业可以采取诸多举措来尽可能地降低监管调查带来的风险。

 

First, companies must have friends in China. In a country where everything is based on relationships, every company must have multiple levels of relationships with both government officials and influential Chinese industry leaders who have their ear to the ground. This is not to encourage any type of corruption, but rather facilitate a free flow of information. In China, trust and respect are paramount and cannot be developed overnight.

首先,企业在中国必须有朋友。在一个一切都基于关系的国家里,所有公司都必须与各级政府官员以及有影响力并且接地气的中国行业领袖保持关系。这不是鼓励企业进行任何形式的腐败,而是为了保障信息畅通。在中国,信任和尊重是最重要的,而这些不可能在一夜之间培养起来。

 

The challenge to Qualcomm might have been avoided or minimised if the US company had had better Chinese government contacts who could have advised it that problems were brewing and explained the need for action.

如果高通在中国政府部门有更好的人脉(对方可能告诉它有些问题在发酵,并解释需要采取行动),它遭遇的挑战也许本来可以避免。

 

It is at this sort of early stage that having knowledge of the problem and the ability to communicate a defence is paramount. Once the investigation was announced publicly in February 2014, there was no path for the NDRC to impose either a minimal penalty or no penalty without losing face.

在这种早期阶段,明白问题所在并有能力沟通辩解是最重要的。一旦在2014年2月公开宣布展开调查,发改委就没办法在不丢脸的情况下做出最低处罚,或者不做任何处罚。

 

Had Qualcomm and NDRC instead been able to negotiate a mutually acceptable solution earlier — and with less publicity — the result may well have been a lesser penalty that did not trigger follow-up investigations in other jurisdictions.

如果当初高通和发改委能够低调协商出双方都能接受的解决办法,结果很可能就是较轻的处罚,也不至于引发其他司法管辖区的后续调查。

 

Second, all foreign companies and their executives, lawyers and other agents must act with great respect in dealing with Chinese officials. US companies in particular have a well-deserved reputation for lacking deference and humility.

其次,所有外国公司和它们的高管、律师和其他代理人员在与中国官员打交道时必须保持极大的尊重。美国公司在缺乏尊重和谦逊方面尤其“名不虚传”。

 

Had InterDigital and Qualcomm originally approached their situations with greater meekness, things might have evolved quite differently. Often it is the lawyers that get in the way, because when you are a hammer everything looks like a nail. The better road is one of calm and thoughtfulness rather than agitation and hostility.

如果当初InterDigital和高通的态度好一些,事态的发展就可能相当不同。这往往是律师坏的事,因为当你是锤子的时候,所有的东西看起来都是钉子。更好的对策是冷静和体谅,而不是情绪激动和对抗。

 

Third, any company that licenses patents or technology in China should always have in its back pocket a specific minimum acceptable royalty rate. That way any dispute can be nipped in the bud with a public announcement that the company is lowering its licensing rate to an "even fairer level", with examples to support this claim. This is not ideal but far better than the alternative of having to face a formal AML investigation.

第三,任何在中国授权使用专利或技术的公司始终应该掌握可接受的最低使用费费率的“底牌”。这样可以将任何纠纷扼杀于萌芽之中——只要公司公开宣称把专利费率降至“更为公平的水平”,并举例支持这种说法。这并非理想情况,但比起不得不面临正式的反垄断调查要好得多。

2016-06-23

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