The European Commission has asked the World Trade Organization (WTO) for consultations to address Chinas unfair trade practices in the field of intellectual property.
China has authorized its courts to set global royalty rates for EU standard essential patents without the patent owners consent. This pressures European high-tech companies to lower their rates worldwide, giving Chinese manufacturers unfair access to these technologies.
It unduly interferes with the competence of EU courts for European patent issues. The EU Commission believes these practices are inconsistent with the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).
Since no satisfactory solution has been forthcoming from China, the EU is compelled to request consultations as a first step in this WTO dispute settlement procedure. The aim is to ensure its high-tech industries, notably in the telecom sector, can effectively exercise their patent rights and protect their investments in innovation.
Next Steps
The dispute settlement consultations requested by the EU are the first step in WTO proceedings. If they do not lead to a satisfactory solution within 60 days, the EU can move to the litigation phase and request the WTO to set up a panel to rule on the matter.
Background
This case involves standard essential patents, which protect technologies essential for manufacturing goods that meet a standard, such as 5G for mobile phones. European companies hold many such high-tech patents, particularly in the telecom sector, giving them a technological edge. By setting global royalty rates for these patents, China attempts to force EU companies to provide Chinese manufacturers cheaper access to that European technology.
The practice of Chinese courts in setting global royalty rates for standard essential patents is related to another dispute, that of anti-suit injunctions, which is also being challenged by the EU at the WTO. The WTO panel established in that case (DS 611) is expected to issue a report in the first quarter of 2025.
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