The European Union (EU) launched a legal with the World Trade Organisation claiming companies in the bloc are “severely” restricted from protecting their patents by Chinese policies, which it states is “extremely damaging” to innovation and growth in the telecom sector.
All 27 member states of the EU said companies are put off protecting their standard-essential patents in court, even outside of China, as they will face hefty fines from the East Asian country.
In a statement, the EU said Chinese courts have been issuing “anti-suit injunctions” since August 2020, preventing companies from taking Chinese firms to court under the threat of heavy fines. This the EU claimed, has resulted in Chinese firms gaining cheaper or free access to European technology.
In one case, the fine was detailed to be €130,000 per day ($147,000) which it argued undermined companies negotiating licence fees with China-based smartphone manufacturers.
The EU did not specify which smartphone makers are guilty of the practice and highlighted the issue has been raised with the Chinese government on numerous occasions. China's largest smartphone manufacturers include Huawei, Oppo, Xiaomi.
European Commission executive vice-president and commissioner for trade Valdis Dombrovskis said: "We must protect the EU's vibrant high-tech industry, an engine for innovation that ensures our leading role in developing future innovative technologies. 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.”