The European Union (EU) has filed a dispute with China at the World Trade Organisation (WTO), alleging that European holder of mobile patents are restricted from taking legal action to protect their intellectual property by Chinese courts.
Typically, any company that uses another firm’s patents must pay royalties for the privilege. Patents that are essential to industry standards such as 5G can be used by anyone else on fair, reasonable and non-discriminatory (FRAND) terms.
However, the EU says many Chinese companies are using mobile patents without permission or paying compensation, with European parent holders prevented from receiving royalties – or any compensation at all – through ‘anti-suit injunctions’.
EU China patent dispute
These injunctions ban patent holders from going to a foreign court to enforce their patent and violations are punished with a daily fine of up to €140,000. This deterrent means many companies accept a lower rate or don’t receive anything.
The filing claims this practice damages innovation, development, and growth in its member states and effectively deprives companies from enforcing the rights that give them a technological edge.
The EU added that it had spoken to its counterparts in China in an attempt to resolve the issue on “several occasions” but an agreement had not been reached.
Its filing is the first step in the WTO process that will allow the EU to request a settlement panel if a compromise with China is not negotiated within the next 60 days.
“We must protect the EU's vibrant high-tech industry, an engine for innovation that ensures our leading role in developing future innovative technologies,” said Valdis Dombrovskis, Executive Vice-President and Commissioner for Trade.
“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.”
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