Renewable Energy: In the Shadow of FRAND and Chinese Anti-Monopoly Law

Intellectual property rights can lead to what are effectively legally permitted monopolies. China has drawn on Western frameworks, particularly from the United States, to regulate the potential abuse of standard essential patents (SEPs), which are critical to specific technological standards. SEPs, if misused, can allow holders to suppress competition through practices such as refusing to license or charging exorbitant fees.

China’s response has been to enforce FRAND (fair, reasonable and non-discriminatory) requirements on SEP holders. This regulatory approach has matured over time, with key milestones including the groundbreaking 2011 Huawei v InterDigital case and the 2019 adoption of the Anti-Monopoly Guidelines on IP Rights. These frameworks ensure that SEP ownership does not equate to market dominance without accountability.

Unlike the telecommunications sector, where legacy SEPs from Western companies dominate, Chinese enterprises are emerging as leaders in renewable energy. The newly issued 2024 Standard Essential Patents Anti-Monopoly Guidelines emphasise balancing tests and case-specific analysis to assess whether SEP practices violate anti-monopoly laws. The guidelines’ flexibility reflects China’s intent to foster innovation while ensuring fair competition.

China’s strategy extends beyond regulation. The Ministry of Industry and Information Technology’s recent Action Plan for High-Quality Development of New Energy Storage Manufacturing encourages active participation in international standard-setting and ownership of SEPs. By 2026, the plan aims for Chinese firms to influence at least 20 international standards in the solar sector, signalling a clear ambition to lead in renewable energy technology.

The interplay of IP and anti-monopoly laws cannot be divorced from broader US-China trade tensions. While the Biden Administration’s Inflation Reduction Act has spurred domestic manufacturing with subsidies, China faces tariffs and trade barriers. In response to these challenges, China is leveraging policy tools such as export tax rebates to maintain competitiveness.

Hong points to a brewing “patent war” as a sign of what is to come. Chinese photovoltaics company Trina Solar, for instance, has filed a patent infringement case with the US International Trade Commission (ITC) against Runergy, another Chinese company, and India’s Adani Solar. This case highlights the evolving role of SEPs in managing competition. As Chinese firms set international standards and wield SEPs strategically, their competitors may counter through litigation in Western courts.

Historically, China’s massive market attracted SEP owners and implementers, often placing Chinese firms on the defensive. Now, with Chinese companies at the forefront, the roles are shifting. SEPs are poised to become a strategic tool for managing global competition and setting technological standards.

The US and Europe will likely intensify scrutiny of SEP practices to curb potential abuses, setting the stage for a new era of geo-technological competition

The renewable energy sector is becoming a battleground where IP, anti-monopoly law and international trade intersect. As China takes the lead in SEP ownership and standard-setting, global stakeholders must navigate an increasingly complex landscape of regulation, litigation and industrial policy. Hong’s analysis underscores the strategic importance of IP and anti-monopoly frameworks in shaping the future of renewable energy.