The European Commission has sent a complaint to the World Trade Organization regarding the “unfair and illegal” practice of China, which, according to the EC, sets rates for European patents without the consent of their owners.
The case concerns the so-called standard patents (SEPs), which protect technologies necessary to produce goods that meet certain standards, such as 5G for mobile phones. European companies hold many such patents, especially in the telecommunications sector, which gives them a technological advantage (e.g. Nokia or Ericsson).
Brussels versus Beijing
Given that the use of patented technologies is necessary for production, the manufacturer must obtain a license for these patents. In order not to impede competition, patent owners undertake to license those patents to manufacturers on fair, reasonable and non-discriminatory terms.
According to the EC, the parties must negotiate a license “in accordance with recognized commercial practices and in good faith.” If a manufacturer fails to obtain a license or refuses to pay, the patent holder can enforce its rights and get an EU court to stop sales of products containing the unlicensed technology.
However, Chinese courts have started setting binding global rates for patents necessary to meet standards without the consent of the patent owner, which is a serious problem for European companies.
By setting global rates, according to the EC, they are trying to force EU companies to provide Chinese producers with cheaper access to European technologies.
European Commission considers that such practices are inconsistent with World Trade Organization (WTO) rules on trade-related aspects of intellectual property rights.
On behalf of the EU, it requested consultations with Chinawhich is the first step in WTO dispute settlement. If a satisfactory solution is not found within 60 days, the EC may request the establishment of an adjudication panel that will issue a decision on the matter. Panel proceedings last on average 12 months.
In November, the European Commission brought a case against China at the World Trade Organization (WTO) over the provisional anti-dumping measures imposed by Beijing on brandy imports from the EU. The Middle Kingdom used them in retaliation for EU tariffs on electric vehicles produced in China.
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