EU claims China blocking action against telecoms patent misuse

World Trade Org HQ.jpg

The European Union is challenging China’s use of its courts to block non-Chinese telecoms vendors from backing their patents.

The 27-nation EU has filed a case against China at the World Trade Organization (WTO, pictured), complaining about Chinese policy over 3G, 4G and 5G patents.

Valdis Dombrovskis, the European Commission’s executive VP and commissioner for trade, said on Friday: “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.”

At the moment the EU’s ambassador to the WTO in Geneva has written to his Chinese opposite number “to request consultations”.

But beneath the polite ambassadorial language the EU is complaining that EU and other non-Chinese companies are being banned from complaining in Chinese courts about alleged infringement of patents – especially so-called “standard-essential patents” (SEPs), which, in the EU’s words “are essential in order to manufacture goods that meet a certain international standard”.

Dombrovskis 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.”

The ambassadorial letter cites cases involving Huawei, Xiaomi, ZTE and others, where it alleges a Chinese court has banned a party from applying for enforcement of judgments of a non-Chinese court or from seeking judicial relief outside the jurisdiction of China.

The EU said: “Since August 2020, Chinese courts have been issuing decisions – known as ‘anti-suit injunctions’ – to exert pressure on EU companies with high-tech patents and to prevent them from rightfully protecting their technologies. Chinese courts also use the threat of heavy fines to deter European companies from going to foreign courts.”

It cites a case in 2020 when Huawei applied for and won a ruling from the Supreme People’s Court of China ordering Conversant Wireless not to apply for enforcement of an injunction granted by the District Court of Düsseldorf, Germany.

The EU noted that the Chinese court “also decided that violation of the order can be sanctioned with a €130,000 daily fine. Since then, Chinese courts have adopted four such anti-suit injunctions against foreign patent holders.”

The Reuters news agency says the European Commission has also consulted the US and Japan, “whose standard-essential patent holders face similar challenges and which want to be setting global tech standards, rather than leaving this to Beijing”.

The EU said it has requested just the first step in dispute settlement proceedings with the WTO. “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.”