By Steve Dickinson
Both the English and the Chinese web have been rife with news of a Chinese government antitrust investigation of Microsoft’s pricing of its software products. The reports initially stated the PRC State IP Office was investigating foreign software companies for selling software at higher prices in China than in their home jurisdictions. This has been a common complaint in China and many foreign software companies have been concerned China’s new Anti-Monopoly Law would be used to attack legal IP monopolies obtained through copyright, patent and trademark law. However, to use the anti-monopoly law to attack high prices would undermine the foundations of IP protection. The news of such an investigation therefore raises serious concerns.
It appears these reports may be false. Microsoft has stated it is unaware of any such investigation and the PRC State IP Office has issued a statement to the effect that it was not conducting any investigation and such reports were “seriously untrue.”
This reported denial makes perfect sense, for the following reasons:
1. The Anti-Monopoly Law has not yet come into force. That will not occur until August 1, 2008.
2. Regulations have not yet been issued.
3. The State Intellectual Property Office has the duty to conduct anti-piracy investigations. It does not have authority in the anti-monopoly area and there is no proposal to grant it such authority.
4. Copyright, patent and trademark are legal monopolies. Article 55 of the Anti-Monopoly law is consistent with the law of most developed countries in that it grants an anti-monopoly exemption for such legally obtained IP monopolies. As in most such laws, the exemption does not apply if the holder of the right abuses its monopoly power in a manner that harms competition. Note that this provision does not protect consumers. The only protection is for competition. High prices do not harm competition, they help competition. This is because they encourage others to enter into the market for the same product. There have been no indications China intends to act against this basic principle of anti-monopoly law.
We will have to wait and see on the truth of this report. Right now though, we are betting there is no such investigation.

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Photo of Dan Harris Dan Harris

Dan is a founder of Harris Bricken, an international law firm with lawyers in Los Angeles, Portland, San Francisco, Seattle, China and Spain.

He primarily represents companies doing business in emerging market countries, having spent years building and maintaining a global, professional network. 

Dan is a founder of Harris Bricken, an international law firm with lawyers in Los Angeles, Portland, San Francisco, Seattle, China and Spain.

He primarily represents companies doing business in emerging market countries, having spent years building and maintaining a global, professional network.  His work has been as varied as securing the release of two improperly held helicopters in Papua New Guinea, setting up a legal framework to move slag from Canada to Poland’s interior, overseeing hundreds of litigation and arbitration matters in Korea, helping someone avoid terrorism charges in Japan, and seizing fish product in China to collect on a debt.

He was named as one of only three Washington State Amazing Lawyers in International Law, is AV rated by Martindale-Hubbell Law Directory (its highest rating), is rated 10.0 by AVVO.com (also its highest rating), and is a recognized SuperLawyer.

Dan is a frequent writer and public speaker on doing business in Asia and constantly travels between the United States and Asia. He most commonly speaks on China law issues and is the lead writer of the award winning China Law Blog. Forbes Magazine, Fortune Magazine, the Wall Street Journal, Investors Business Daily, Business Week, The National Law Journal, The Washington Post, The ABA Journal, The Economist, Newsweek, NPR, The New York Times and Inside Counsel have all interviewed Dan regarding various aspects of his international law practice.

Dan is licensed in Washington, Illinois, and Alaska.

In tandem with the international law team at his firm, Dan focuses on setting up/registering companies overseas (via WFOEs, Rep Offices or Joint Ventures), drafting international contracts (NDAs, OEM Agreements, licensing, distribution, etc.), protecting IP (trademarks, trade secrets, copyrights and patents), and overseeing M&A transactions.