EU challenges China at WTO over patents as feud deepens

[BRUSSELS] The EU challenged China at the World Trade Organization (WTO) on Friday (Feb 18) by accusing Beijing of preventing European tech companies from using foreign courts to defend their patents, opening a new chapter in their trade feud.

EU-China ties have become increasingly fractious, and the latest salvo comes just weeks after Brussels opened a separate case at the WTO over accusations that Beijing was illegally punishing EU member state Lithuania over its stance on Taiwan.

That follows a volley of tit-for-tat sanctions over the plight of the Uighur minority in China that has blocked ratification of a long-negotiated EU-China investment deal and sparked an unprecedented war of words.

"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," EU executive vice president Valdis Dombrovskis said in a statement.

The manufacturing of high-tech products from phones to electric cars requires a huge amount of patented technology and Chinese companies have for years been accused of violating patent terms, unfairly punishing rivals.

The EU said that since a supreme court decision in 2020, judges in China were using threats of heavy fines and other legal decisions to punish EU companies that took their grievances to other courts around the world.

These court actions were lodged by Chinese manufacturers that were seeking "cheaper or even free access to European technology," the EU said.

The patents involved are required to make sure smartphones meet international manufacturing standards. European firms Conversant, Ericsson, InterDigital, and Sharp are some of the companies that have run foul of the court decisions.

Companies benefitting from the injunctions included Huawei, Xiaomi, ZTE and Oppo, officials said, with Chinese courts in some cases handing out injunctions that halved their licensing fees.

Beijing's harshest critics believe the courts are being instrumentalised to benefit domestic manufacturers, cut the price of patents and promote China as a global standard-setter in the use of intellectual property.

South Korean giant Samsung has also used a Chinese court to stop patent-related litigation from Swedish rival Ericsson in countries such as Germany.

The "consultations" opened by the EU are the first step in the WTO dispute settlement procedure.

If these consultations fail to resolve the matter within 60 days, the EU may request the establishment of a panel to rule on the matter.

The United States, which is pushing its allies to up the pressure on its global rival, is widely expected to join the EU's patent case.

The EU's case at the WTO to back Lithuania has been joined by the US, Britain, Australia and Taiwan. AFP