EU begins WTO dispute against China over SEPs
In an announcement made on Friday, February 18, the European Commission—which filed on behalf of the EU’s 27 members—said that EU companies were being deterred from protecting their standard-essential patents (SEP) in foreign courts.
In August 2020, Chinese courts began issuing anti-suit injunctions in SEP cases, prohibiting patent owners from going to a non-Chinese court to enforce their patents. The first anti-suit injunction was handed down by the Chinese Supreme People's Court in a SEP royalty dispute between Huawei and Conversant.
According to the European Commission, the Chinese courts are also using the "threat of heavy fines to deter European companies from going to foreign courts”. It added that the Supreme People's Court had decided that violation of an anti-suit injunction order can be sanctioned with an RBM1 million ($158,000) daily fine.
“This has left European high-tech companies at a significant disadvantage when fighting for their rights. Chinese manufacturers request these anti-suit injunctions to benefit from cheaper or even free access to European technology,” said the European Commission.
Chinese courts have now issued four anti-suit injunctions in total, according to the European Commission.
Valdis Dombrovskis, executive vice-president 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 today.”
The European Commission warned that the Chinese policy is “extremely damaging to innovation and growth in Europe”.
In addition to its anti-suit injunction challenge, the European Commission has also alleged that China is keeping key information private by failing to publish final decisions which relate to the Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement and by failing to share information on final judicial decisions relating to patents.
The EU has reportedly raised its SEP complaint with China on a number of occasions in an attempt to find a solution but has not had success.
As the actions are allegedly inconsistent with the TRIPS Agreement, the EU has requested consultations at the WTO.
Dispute settlement consultations 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.
