The EU has initiated a legal challenge against China at the World Trade Organization, arguing that Chinese courts prevent European companies from protecting telecom technology patents.
The European Commission, which filed the challenge on behalf of the EU’s 27 members, said EU companies were being deterred from going to a foreign court to safeguard their standard-essential patents (SEPs).
The commission consulted with the US and Japan, whose standard-essential patent holders face similar challenges.
Mobile phone manufacturers need to license SEP technology for products to meet certain international standards.
The commission said Chinese courts had, since August 2020, been issuing “anti-suit injunctions” which prohibit EU companies from going to foreign courts, with the threat of heavy fines as a deterrent.
In one case, the fine was US$147,758 a day, which hampered the company as it sought to negotiate license fees with Chinese smartphone makers, the EU executive said.
China said it regretted the EU challenge and that it always upheld the multilateral trading system.
The European Commission did not specify the companies involved. China’s largest smartphone makers are Oppo, Vivo, Xiaomi and Honor, formerly owned by Huawei. European SEP holders include Nokia and Ericsson.
The commission said it had raised the issue on a number of occasions with China, without resolution.
The bloc believes China is violating the terms of its Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement with the WTO.
WTO challenges start with a formal 60-day period of consultations between the parties after which the EU can request a WTO panel ruling. The process, including possible appeals, can take years.
- Reuters, with editing by Neal McGrath