On December 14, 2023, China Supreme People’s Court (“the Supreme Court”) rendered a second-instance judgment on the case of four Ningbo rare earth enterprises suing Hitachi Metals for abusing its dominant market position, overturning the first-instance judgment by the Ningbo Intermediate People’s Court (“Ningbo Intermediate Court”) and dismissing all claims of the plaintiffs in the first instance.

On April 23, 2021, the Ningbo Intermediate Court, in its first-instance judgment, held that the relevant product market in this case should be defined as the market for “licensing sintered NdFeB essential patents owned by Hitachi Metals”. Therefore, Hitachi Metals, Ltd (“Hitachi Metals”), as the sole patent holder in this assumed market, was deemed to possess a 100% market share, and its refusal to grant patent licenses to potential licensees was considered an abuse of its dominant market position by refusing to deal. The Ningbo Intermediate Court’s aforementioned reasoning made this case the first antitrust case involving refusal to license non-standard essential patents “non-SEPs” in China.

In the second-instance judgment, the Supreme Court pointed out that the relevant product market in this case should be defined as the market for the production technology of sintered NdFeB materials. The market definition in the first-instance judgment lacked factual and legal basis. Additionally, since the plaintiffs in the first instance failed to provide evidence demonstrating Hitachi Metals’ market dominance in the relevant market, their claims regarding Hitachi Metals’ abuse of its dominant market position and the corresponding civil liability were naturally untenable.

AnJie Broad Antitrust Team has been representing Hitachi Metals since 2014 against the lawsuits filed by the four plaintiffs and finally achieved a total victory after nearly a decade of litigation. This case, as the first antitrust case involving refusal to license non-SEPs in China, has garnered significant attention worldwide. The Supreme Court’s approach to the adjudication of key issues in this case, including the definition of relevant markets, the boundaries of antitrust intervention in the exercise of intellectual property rights, and the prudent application of essential facilities doctrine in the field of intellectual property, holds significant milestone value in both the judicial and administrative enforcement practices of antitrust law in China.