EU Challenges China at WTO over Telecom Patent Protection

FILE PHOTO: A logo is pictured on the World Trade Organisation (WTO) building before a ministerial meeting to discuss a draft agreement on curbing subsidies for the fisheries industry in Geneva, Switzerland, July 15, 2021. REUTERS/Denis Balibouse

The European Union launched a legal challenge against China at the World Trade Organization on Friday over what it says is a Chinese failure to allow European companies to protect their patents for telecoms technology.

The European Commission, which filed the challenge on behalf of the EU’s 27 members, said EU companies were being prevented from going to a foreign court to protect their standard-essential patents.

Mobile phone manufacturers need to obtain licences for these patents because they are essential for their products to meet certain international standards.

If the patent holders go to courts outside China, they often face large fines, such as 130,000 euros ($147,758) a day in one case, and the practice undermines their ability to agree licence fees at market rates with Chinese mobile phone makers.

The Commission said that Chinese courts had, since August 2020, been issuing “anti-suit injunctions”, which prevented EU companies seeking recourse in foreign courts, with the threat of heavy fines as a deterrent.

The European Union had raised this issue on a number of occasions with China, but not resolved it.

The bloc believes China is violating the WTO’s agreement on trade-related aspects of intellectual property rights (TRIPS).

WTO challenges start with a formal 60-day period of consultations between the parties. If they do not resolve the dispute, the EU can request that a WTO panel rule on the matter. The WTO can take years to resolve disputes.

The European Commission did not specify companies involved. China’s largest smartphone makers are Oppo, Vivo, Xiaomi and Honor, which was formerly owned by Huawei. European patent holders include Nokia and Ericsson.

The Commission has also consulted with the United States and Japan, whose standard-essential patent holders face similar challenges.