Dispute over patent protection: EU moves against China before World Trade Organization

The European Union is taking action against China before the World Trade Organization (WTO).

It is about the patent protection of European high-tech companies, as the EU Commission announced on Friday in Brussels.

She accuses China of putting pressure on telecom companies from Europe so that they do not sue for infringement of their patent rights in countries outside of the People's Republic.

Telecommunications companies such as Ericsson and Nokia, which hold patents in connection with mobile phone standards such as 5G, are particularly affected.

Patent holders who go to court outside of China are often subject to significant fines in China, putting them under pressure to settle for below-market license fees, the Brussels authority said.

Since August 2020, Chinese courts have been able to prohibit patent owners from asserting their rights in foreign courts.

If they do so, they face fines of the equivalent of 130,000 euros a day.

That is "extremely damaging for innovation and growth in Europe," stressed Dombrovskis.

"These Chinese policies severely hamper innovation and growth in Europe and de facto deprive European tech companies of the ability to exercise and enforce the rights that give them a technological edge," criticized the EU Commission.

retaliatory tariffs

Consultations with China are now planned as a first step in the WTO process.

If these are denied by Beijing or fail, the EU could take the case to arbitration.

This in turn could then allow the EU to impose retaliatory measures such as punitive tariffs on Chinese imports.

"EU companies have the right to defend their rights on fair terms if their technology is used illegally," commented EU Commissioner Valdis Dombrovskis.

“That is why we are launching WTO consultations today.”

The EU's WTO case against China is the second in just a few weeks.

The EU had already presented another case at the end of January.

The reason for this are trade restrictions that Beijing issued after a diplomatic dispute against member state Lithuania.

Taiwan recently opened a representation under its own name in the Baltic state.

Beijing does not recognize the island as independent and therefore reacted with coercive measures against Lithuania.

From a European point of view, these are not compatible with the rules of the World Trade Organization (WTO) and also affect other exports from the EU internal market.