Telecom patents prompt EU legal challenge against China at the WTO

The EU is eager to promote innovation and growth in a digital age, but whose? This is the question one might reasonably ask on learning of the EU’s launch of a complaint at the WTO against China last Friday, 18 February 2022. 

The substance of the complaint is the allegation that Chinese courts are obstacles to European companies’ legitimate enforcement of telecom patents on technologies such as 3G, 4G, and 5G through the use of anti-suit injunctions. The EU alleges that China effectively enables domestic companies to infringe European-held patents, then unfairly restricts patentees from enforcing their rights in other jurisdictions via anti-suit injunctions. 

Notwithstanding the statement of Valdis Dombrovskis, Executive Vice-President and Commissioner for Trade, in the European Commission’s press release that, “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,” it is not clear why the EU chose to act now although it comes on the heels of its launch of its consultation on SEPs. Details of the complaint are fairly scarce, and the Commission did not, as one might expect, identify any specific European companies which have been so restricted. 

Clues can be found in last year’s Art. 63 TRIPS transparency request against China, which named four cases: Conversant v. Huawei, Oppo v. Sharp, Xiaomi v InterDigital, and Samsung v. Ericsson. Of these, only Ericsson is European. Further coverage can be found at China IPR, here. The launch of the latest procedures suggests that the EU found China’s brief response of September 2021 rather lacking. (Nokia is another contender as a European company which the EU might be referring to.)

Answers may not be especially forthcoming: WTO challenges begin with a 60 day consultation period, after which the EU will be able to request a panel ruling. Taking potential appeals into account, it may be years before the proceedings wind up. Nonetheless, it will be interesting to see how China responds. Merpel wonders if that response might appear in forms other than formal WTO proceedings, whether by way of further Court guidance or decisions coming from the Chinese courts or the inflammation of already tense trade relations. 

Whatever happens, at least one thing is clear: anti-suit injunctions are a symptom of an underlying problem surrounding who ought to be allowed to set global FRAND rates. This Kat sees complaints like these as being vanishingly unlikely to provide a more fundamental answer to issues including China’s role in these disputes.