EU files case against China at WTO over SEPs

The European Union has filed a case against China at the World Trade Organization (WTO) claiming that Chinese authorities are restricting EU companies from going to a foreign course to protect and use their patents. The case involves standards-essential patents (SEPs) for key technologies (including 3G, 4G, and 5G). Many technologies that are essential parts of a standard are patented. Companies generally make their SEPs available under fair, reasonable, and non-discriminatory (FRAND) terms, but manufacturers need to obtain a license to use the patents. If this does not happen, the SEP holder can enforce the patents and ask a court to stop the sales of the products which embed the unlicensed technology. In 2020, China’s Supreme People’s Court decided that Chinese courts can prohibit patent holders from going to a non-Chinese court to enforce their patents. The EU argues that this policy ‘severely restricts EU companies with rights to key technologies (such as 3G, 4G and 5G) from protecting these rights when their patents are used illegally or without appropriate compensation by, for example, Chinese mobile phone manufacturers. The patent holders that do go to court outside China often face significant fines in China, putting them under pressure to settle for licensing fees below market rates.’ According to the EU, China is breaching the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights. The block is requesting dispute settlement consultations with China at the WTO. If these 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.