The European Union has filed a case against China at the World Trade Organization (WTO) for restricting EU high-tech companies from going to a foreign court to protect and use their patents.
In a release, the European Commission noted that China “severely restricts EU companies with rights to key technologies (such as 3G, 4G and 5G) from protecting these rights when their patents are used illegally or without appropriate compensation by, for example, Chinese mobile phone manufacturers.
“The patent holders that do go to court outside China often face significant fines in China, putting them under pressure to settle for licensing fees below market rates,” the EC said.
The body also said that this Chinese policy is “extremely damaging to innovation and growth in Europe, effectively depriving European technology companies of the possibility to exercise and enforce the rights that give them a technological edge.”
Valdis Dombrovskis, EVP and commissioner for trade, said: “We must protect the EU’s vibrant high-tech industry, an engine for innovation that ensures our leading role in developing future innovative technologies. EU companies have a right to seek justice on fair terms when their technology is used illegally. That is why we are launching WTO consultations.”
In August 2020, China’s Supreme People’s Court ruled that Chinese courts can prohibit patent holders from going to a non-Chinese court to enforce their patents by putting in place an “anti-suit injunction”. The Supreme People’s Court also decided that violation of the order can be sanctioned with a 130,000 euros daily fine. Since then, Chinese courts have adopted four such anti-suit injunctions against foreign patent holders.
The European body noted that Chinese manufacturers “request these anti-suit injunctions to benefit from cheaper or even free access to European technology.”
The commission also said that the EU has “raised this issue with China on a number of occasions in an attempt to find a solution, to no avail. As the Chinese actions are, according to the EU, inconsistent with the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), the EU has requested consultations at the WTO.”
The dispute settlement consultations that the EU has requested are the first step in WTO dispute settlement proceedings. If they do not lead to a satisfactory solution within 60 days, the EU can request the WTO to set up a panel to rule on the matter, the commission said.
