EU Takes on China Over Unfair Patent Practices
The European Commission has launched a formal complaint with the World Trade Organization (WTO) against China’s alleged unfair and illegal practices regarding standard essential patents (SEPs). At the heart of the issue is China’s tendency to set worldwide royalty rates for EU-held SEPs without the patent owner’s consent.
The Impact on European High-Tech Companies
This practice, according to the Commission, puts immense pressure on innovative European high-tech companies to lower their rates globally, ultimately giving Chinese manufacturers cheaper access to European technologies. The telecoms sector is particularly affected, with companies like Nokia and Ericsson holding significant SEP portfolios.
The WTO Dispute Settlement Process
The Commission has requested consultations with China, marking the first step in the WTO dispute settlement process. If a satisfactory solution is not reached within 60 days, the EU executive can request the establishment of an adjudicating panel. Panel proceedings typically take around 12 months to conclude.
A Broader Pattern of Unfair Practices
This case is linked to another dispute brought by the EU to the WTO in 2022, concerning Chinese anti-suit injunctions. These injunctions limit telecom patent holders’ ability to enforce their intellectual property rights in non-Chinese courts, with the threat of heavy fines if they do so. A panel is expected to issue its final report on this matter in the first quarter of this year.
Protecting EU Intellectual Property Rights
The European Commission is determined to protect the intellectual property rights of EU companies, ensuring a level playing field in the global market. By taking a strong stance against China’s unfair practices, the Commission aims to promote fair competition and innovation in the high-tech sector.
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