Since the Anti-Monopoly Law (AML) came into effective in August 2008, a number of private actions have been brought before the court against business giants such as Baidu, Shanda, China Mobile, Sinopec Beijing Oil Products Company and China Netcom. After a year-long wait, the first court decision in a private antitrust litigation has finally been made.

On 23 October 2009, the Shanghai No. 1 Intermediate People's Court dismissed the abuse of dominance case filed by Beijing Sursen Electronic Technology against Shanda Interactive Entertainment and Shanghai Xuanting Entertainment Information Technology.

Shanghai Co-Effort law firm's IP partner You Minjian and lawyer Li Yan represented the defendants, and Shanghai Diligence Law firm's partner Sun Ying acted as the plaintiff's legal advisor.

While the public has paid much attention to this case, Shanda's general counsel Jerry Zhang noted that the court decision is an expected one and didn't cause a stir in the company. "I don't view this case as a relevant private antitrust litigation against abuse of dominant position. It didn't involve any typical issues or matters concerning the AML law," said Zhang. "So the final result is reasonable and within our expectations.

"This case is significant because it's the first case adjudicated by a court under the new AML regime, but it hardly has any precedent value for pending and future antitrust litigation," he said.

Zhang also noted that ensuring his company's compliance with AML has become an integral part of the in-house legal department's work, but because it's such a new area, there are very few experienced lawyers in private practice that companies can turn to. In this lawsuit, Shanda turned to its long-standing external advisor for IP-related, contentious issues - Co-Effort partner You Minjian.

This case, although it involved only a few thousand dollars worth of damage, has attracted significant attention from the international business and legal communities. Freshfields Bruckhaus Deringer, for example, has been monitoring these cases with great interest.

"Although the facts of this case were unusual in that the alleged abuse was not typical of the types of abuse usually litigated in courts in other jurisdictions, the Shanghai Court's judgment should nonetheless be welcomed as an early indication that courts will be reluctant to uphold AML claims which do not meet the necessary evidential standards," said Michael Han, partner and co-head of the firm's China competition practice.

Lawyers are expecting to see decisions in a number of cases such as this one in which plaintiffs have attempted to test the boundaries of the AML. Companies perceived to be dominant will also be keeping a close eye on the developments.

Beijing Sursen VS Shanda and Xuanting

Beijing Sursen Electronic Technology, an online digital book website operator, sued Shanghai Shanda Network Development and Shanghai Xuanting Entertainment Information Technology for allegedly abusing its market-leading position for online literature under the Anti-Monopoly Law. The plaintiff was seeking a public apology and RMB16,820 (US$2,463) in damages.

The plaintiff claimed that it had commissioned two authors to write a sequel to a popular novel series originally published by the defendants. According to the plaintiff, the authors were later "threatened" by the defendants and as result of these threats stopped writing the sequel. 

The Shanghai Court rejected the plaintiff's claim, holding that the plaintiff had failed to adduce sufficient evidence to prove that the defendants held a dominant position in the market for online literature or that the defendants had forced the authors to stop writing sequels to the novel. In addition, the Shanghai Court found that the defendants had been justified in their actions as they were merely attempting to protect their IP rights.


 

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