The European Commission officially requested new consultations with China at the World Trade Organization (WTO) on Friday 18 February. The EU accuses China of not complying with WTO rules because, according to the EU, Beijing would prevent holders of rights to crucial technologies from enforcing them in courts outside China.
Patent holders have to negotiate with manufacturing companies to sell them the intellectual property rights. Therefore, manufacturers sometimes violate intellectual property rights and use patents illegally or without paying appropriate compensation. In such cases, patent holders resort to the courts to settle the dispute. China then intervenes, and has done so since 2020, by imposing “anti-suit injunctions”, which prevent lawsuits. It also threatens European patent holders with heavy fines if they fail to comply with the injunction.
Chinese courts have imposed four such injunctions since 2020.
China is putting pressure on patent holders to agree to surrender their patents at below-market prices, according to the Commission.
The European institution has approached China on this issue for several months, after receiving complaints from companies over the past year. It also initiated discussions at the WTO through the Council on Trade-Related Aspects of Intellectual Property Rights (TRIPS). It did not receive a satisfactory response.
“It’s a policy with a clear economic interest, it’s about protecting their companies”, says a European source.
This is why the Commission is calling for WTO consultations as a first step in a dispute settlement procedure. China has 10 days to accept or reject the request for consultations. If the country refuses, or if the consultations are fruitless after 60 days, the EU can request the convening of a WTO arbitration tribunal.
It has already requested consultations with China on the trade restriction measures imposed by this country since December (see EUROPE 12878/4). (Original version in French by Léa Marchal)