Why Settlement Agreements In Patent Litigation Were Deemed As Monopoly Agreements? Analysis Of The Judgement And Criteria For Determining Monopoly Agreement By The Supreme People’s Court

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Recently, AnJie Law Firm’s (“AnJie”) attorneys represented the appellant, a power equipment company, in a horizontal monopoly agreement dispute concerning “transformer changer” that heard by the Intellectual Property Court of the Supreme Court (“IP Court of the SPC”). AnJie successfully obtained a verdict in the second instance, which reversed the first instance judgement and invalidated the settlement agreement in question as it violates AML. [Docket No.: (2021) Zui Gao Fa Zhi Min Zhong No. 1298, A Horizontal Monopoly Agreement Dispute Concerning Transformer Changer]. In this case, the agreement in question is a settlement agreement entered by the parties to settle a patent dispute in another case. In the hearing, the IP Court of the SPC particularly examined whether a patent dispute settlement agreement constitutes a monopoly agreement and what are the criteria for determining a monopoly agreement, among others. In the “Interview on the Third Anniversary of the Establishment of the IP Court of the SPC” published by People’s Daily Online on February 28, 2022, ZHU Li, the Deputy Chief Judge of the IP Court of the SPC, particularly remarked on the case when presenting the work of the IP Court of the SPC since its establishment: “in the case of a horizontal monopoly agreement dispute concerning transformer changer, the court determined the settlement agreement in question constituted a horizontal monopoly agreement and therefore the whole agreement was void. The Court has strictly regulated the acts of restricting the production quantity or sales volume of commodities, dividing the sales market or the raw material supply market, fixing or changing the price of commodities in the guise of an “patent infringement settlement agreement.” Horizontal monopoly agreement is a core violation strictly regulated by AML in many jurisdictions. In the judicial and administrative enforcement practice in China, there have been a number of cases involving horizontal monopoly agreements. However, this case should be the first one in China’s anti-monopoly litigation to discuss in detail whether a settlement agreement in a civil litigation constitutes a monopoly agreement, how the elements of a horizontal monopoly agreement should be determined, and how to solve the conflict between the adjudicative documents of the previous patent dispute and that of the latter anti-monopoly civil litigation.